21st August 2011: Buying a House? Get a Mortgage Discount.

Banks are offering discounts up to 1 percent off their standard variable mortgage rates to stimulate the home loan market ahead of the crucial spring selling campaign.

With loan growth across the market having dropped back to just 6 per cent over the 12 months to June 30 from an annual average of 8 per cent over the previous two years, lenders are using a range of cheaper offerings to tempt reluctant consumers.

The push is being driven by the banks' own lower lending costs as they recycle a huge increase in customer deposits into mortgages.

A reduction in deposit interest rates in recent weeks has given lenders greater flexibility to counter high mortgage rates that are about 7.8 per cent for a standard variable home loan.

Commonwealth Bank is now funding 61 per cent of its loan needs from deposits as opposed to the more costly channel of borrowing from international credit markets.

While banks have traditionally offered discounts between 0.4 and 0.7 per cent to entice customers to borrow, the lacklustre growth in mortgage lending caused by the fall in consumer confidence has spurred new price competition.

Suncorp and ANZ are leading the way, according to published rates, with as much as 1 per cent off their standard variable rates.

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