The five-year investment loan of 4.09 per cent includes a discount of 105 basis points.

The "flexi" five-year loan is set at 3.79 per cent, which includes a discount of 80 basis points.

"These changes are designed to help first time buyers at the start of their home ownership journey and a cut in fees means they can put their savings towards purchases for their new home," Mr Wright said.

"This offer also extends to 'rentvestor' first-home buyers who are looking to purchase their first property to rent out. We're seeing this trend increase, with many first-home buyers purchasing properties to rent in more affordable areas while choosing to live in close proximity to the city."

First-time buyers are an emerging force in the property market as high prices, tougher controls on overseas buyers and tighter lending standards slow overall demand.

For example, there was a 12.6 per cent increase, or about 9900 loans, in first-time home buyers in Victoria during the final three months of last year, or nearly 40 per cent for the year, compared to the previous 12 months.

In NSW, the year-on-year increase was nearly 75 per cent, about 11 per cent for the final quarter of 2017, or about 7500 loans.

Major lenders are aggressively reducing key fixed and investor interest-only rates despite Reserve Bank of Australia and prudential regulators' concerns about record level household debt.


The big four banks have lots of room for additional interest-only cuts because they have undershot the Australian Prudential Regulation Authority's 30 per cent cap on new lending. They are also seeking to grab back market share from smaller lenders and boost profits.

Sally Tindall, of RateCity.com.au, which monitors product rates and fees, said the majors were at "war' as they used their books to build market share.

The new lending strategy also indicates the major lenders are not pricing in a rate hike soon, despite the majority of economists predicting that the next interest rate change is likely to be upward.

The falling take-up of fixed rate loans, according to Australian Bureau of Statistics numbers, also suggests property buyers could also be pushing back the prospect of higher rates.

Bankwest, Homeloans.com and BlueBay Home Loans recently cut rates by up to 20 basis points, reduced investment loan loadings for low documentation loans and boosted features for borrowers who might not qualify with big four borrowers.

ING, Macquarie Bank and Virgin Money have also reduced rates on their interest-only products.