Announcing our new interest rate setting policy

Great news! Keystart is pleased to announce an update to our interest rate setting policy. Since 2011, our policy has been to use the average of the standard variable interest rate of the four major banks (ANZ, CBA, NAB, Westpac). Given the low deposit nature of the lending we provide, our interest rate policy has enabled us to manage our lending risk responsibly whilst remaining focused on our vision of making the dream of affordable home ownership a reality for more people.

Following an extensive review, including careful consideration of what our customers are telling us about increased cost of living pressures, our new interest rate policy is to base our rate on the movements of the Reserve Bank of Australia's (RBA's) official cash rate.

As a result, in response to recent change in the Reserve Bank official cash rate, Keystart's rate will reduce from 8.26% to 7.60% effective 1 July 2023. Under Keystart's previous policy, our interest rate would have increased to 8.51% following the recent movement of the big four banks.

This new rate applies for all Keystart customers with loans commencing after 16 October 2009. For all Keystart customers with loans commencing prior to and including 16 October 2009, the standard variable interest rate will reduce from 7.48% to 6.82% at the same effective date.*

Why we're making this change

The new policy will better serve the interests of our customers and our mission as a transitional lender, due to the following reasons.

• The big four banks are not obliged to pass on the RBA's reductions in interest rates to their SVRs.
• The banks have at times increased rates outside the RBA's interest rate cycle. As a result, the difference between the banks' standard variable rate and the RBA's official cash rate has increased gradually over time.
• The number of rate increases in a very short amount of time, at a time of rising costs of living in general, have made it difficult for customers to make adjustments in their household spending In recent years.
  

Benefits of this change

The benefits of the new policy are:

• An immediate reduction in the interest rate for all Keystart customers, taking significant pressure off Western Australian families. For the average Keystart customer with a $390,000 30-year loan, the rate reduction means an annual savings of almost $3,000.
• Removal of the link between Keystart's interest rate and the pricing policies and decisions of the Big Four banks
• The rate reduction will make it easier for customers to build equity in their home sooner, while continuing to encourage transition to traditional lenders once they have built sufficient equity.
• New customers will have higher borrowing capacity without losing the unique benefit of only requiring a deposit as low as 2% and avoiding costly lender's mortgage insurance.

What to do next

If you're a Keystart customer, you'll receive an update from us soon to let you know your new minimum monthly repayment. 

If you use direct debit to make your loan payments...

If your new minimum repayment is less than the amount you are currently paying, we won't make any change to your direct debit, unless you advise us to do so. If you can keep your direct debit as the higher amount, you'll be paying off your home loan sooner, bringing you closer to refinancing to another lender.

If you choose to change your direct debit amount, you can get that set up now by completing the form below.

If you are using some other payment method (other than direct debit)

You can amend your payment amounts yourself if you wish to do so. Remember, if you pay more than your minimum monthly repayment amount, you'll be paying off your home loan sooner, bringing you closer to refinancing to another lender.