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Australia Interest Rates Free Fall?

RBA, the central bank of Australia, has cut interest rate last week (4 Oct) as widely expected for the third time in less than 6 months – the official cash rate has now crashed below 1% to 0.75% following consecutive cuts back in June and July.

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The Big Four banks of Australia – CBA (Commonwealth Bank of Australia), ANZ, Westpac, NAB (National Australia Bank) – had previously come under heavy criticism for not passing the full basis points cuts of 0.25% in each of the last two rounds to homeowners.  Even though new fixed rate mortgages have come down substantially below 3% now, the standard variable rate home loans for existing owner-occupied homes have not dropped as much with a few of Big Four banks opting to cut by a smaller 0.18-0.20%. Some have later relented to political pressure to pass on the full 0.25% cut in July, but still overall the drop over the two rounds of cuts were 0.40-0.45%.

With the latest cut by RBA this month, the Big Four has kept pace with one another this time by cutting about 0.15% to bring prevailing owner-occupied mortgage rates to a range of 4.7-4.8%.  The banks do not have much room to manoeuvre with deposit rates already at record lows and if they were to pass the full 25 basis points cut to end-borrowers, it would mean a further squeeze on profit margins and a drop in dividends payout which many retirees depended on, they argue.

The fact remains – existing homeowners could not benefit fully from the full 75 basis points drop in benchmark cash rate.  Whereas it is bonanza time for those looking to sign on new Australia property loans for their purchases with interest rates seemingly on a free fall downunder.  We have already given our recommendation back in June that there is no better time for global real estate investors to make their move into Australia property market especially given upticks in property prices in both Melborne and Sydney. Unseen in a long time, there is now a confluence of factors where all the stars are aligned for that Australia property purchase – prices bottoming out, interest rates in a free fall, and AUD currency at the weakest in years!

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For both Singaporeans, PRs and foreigners alike, we now bring you yet a “fourth star” alignment – the headlines interest rates for Australia property loans from Singapore banks have dropped to levels much lower than those from Australian banks – averaging 4.0-4.3% for buy-to-let Australia properties (this rate could be in excess of 6% from Australian lenders).  

What’s more, if one chooses to finance in AUD, there are variable rates now as low as 3.05%! Yes you heard right, that’s for investment properties.

For non-resident foreigners facing more challenges getting financing from Australian banks, why not speak to us here in Singapore and you might be surprised there are some significant advantages of taking your Australia property loans from Singapore.

First understand some of the key differences summarized for you below:

Australia MortgageFinancing from AustraliaFinancing from Singapore

Lending CriteriaMore challenges or haircuts on offshore income (outside of Australia)Catering more to preferred status clients earning above S$120,000 or willing to place deposits of S$200,000-300,000 to join preferred banking in Singapore;
Strictly not for Australian nationals or PRs unless they are Singapore tax-residents working in Singapore.


All states and citiesOnly for the major cities of Sydney, Melbourne, Perth, Brisbane, Gold Coast, Sunshine Coast and Adelaide, and usually within metro locations with approved project list

Property Type

All typesBoth completed or “off-the-plan” units; strictly not for land & house type (must be completed in one title)

Loan Type

More options with variable, fixed and even interest-only loan

Only variable rate P+I loan; there is strictly no interest-only loan

Up to 70% for foreigners with higher interest rates

Up to 60% for foreigners (non-Singapore resident) with more or less same interest as a local

Only financing in AUDOption to finance in AUD or SGD (or switch between the two currencies for more savvy clients to profit from FX movements, with small fee)

There are talks of RBA doing further cuts to bring the cash rate to 0.50% before the year is over, and perhaps one more cut in early 2020.  As lenders downunder are not passing on the full interest rate cuts to end-borrowers, it is making the job of the central bank harder as they are pull all stops to get Australians to start spending more and to get construction activity restarted.  There is huge debate going on as to whether monetary policy is simply too blunt a tool to revive the economy and much more fiscal measures may be needed.

While all that plays out, the free fall on interest rates is set to continue for the foreseeable short term and many believe mortgage interest will continue to stay low for the next two years at the very least.

Finally, I will just add – with devaluation of yuan and flow of funds out of North Asia (including Hong Kong) in search of currency diversification, it is not a bad idea at all to park some funds in the financial centre of South Asia where Sing dollar is known to be the safe-haven currency.

Since 2014, has provided thought leadership in the mortgage planning space in Singapore.  We provide advisory for financing and remortgaging of properties in Singapore, Australia and UK through our network of lenders in Singapore, as well as partners in London, to bring you complete solutions for all residential and commercial real estate.  

Speak to us today for the best Australia property loan rates.

Compare All Latest Rates 2021