A bank has just reduced its interest rates....what does that mean?

You read correctly. I have just received an email that ING Bank is reducing its variable interest rates (albeit by 0.10%) effective November 22nd 2022.

This is the first time in a number of months that we have seen a bank actually reduce its variable interest rates.

With consecutive rate rises over the last 5 months, it has been an exhausting road for variable home loan customers. So when we see a large bank like ING actually reduce it's interest rates, what does it actually mean? Are other banks going to follow suit?

The truth is it is too early to tell why this rate reduction has occurred and whether there are other banks that will follow suit. Sometimes banks if they discover they have moved to far with their rates can decide to reduce their variable rate to attract the type of business they are seeking.. Other times, a bank might decide to go against the flow and launch a campaign to attract new business by offering a reduced variable rate.

Interestingly in this case, the discount is only being offered to new business to ING Bank which could point to the latter of the two arguments.

While this doesn't benefit existing customers, for those looking to break the cycle of month by month rate rises, it could be a chance to jump on a lower rate, providing it is better than what you are currently on. ING is one of the banks which is offering cash back to refinance customers which could sweeten the deal.

Even without reducing their rates, it is important to note that there are a number of other banks that currently have large cash back offers for customers eager to refinance. So it pays to do your homework to work out what is right for you with a combination of interest rate and cash back offers.

If you would like to find out more, please contact me. In the meantime, I will be monitoring my emails this week to see what comes in from the other banks. I'll keep you posted.