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Lenders slash home loan rates in 2016, with just one catch

Lenders slash home loan rates in 2016, with just one catch

Competition among mortgage providers is already heating up with hot new discounts from a range of lenders hitting the market in the first few weeks of January.

AMP Bank, Beyond Bank, Click Home Loans, IMB, Mortgage House and Suncorp Bank have all announced new low rates in 2016, slashed by up to 0.45 percentage points.

That might seem like small change but on a $300,000 home loan, it’s an extra $81 off your mortgage repayments a month, or $972 a year.  If you invest that $81 back into your mortgage each month you’ll save around $29,000 over the life of a 30 year loan, and pay it off three years earlier.

There is, however, a catch – these deals are only for new customers.

Sally Tindall, money editor at RateCity.com.au said, “We regularly see exciting new rates come on to the market but when we do a bit of digging, we often discover that they’re for new customers only”.

“It’s not exactly common for a lender to decide to lower an existing customer’s variable rate, except in response to a cut in the RBA cash rate.

“These double standards can feel like a slap in the face for loyal customers, but that doesn’t mean you have to just cop it.  If you are a long-serving customer, find out what rate your bank is offering new customers, because if it’s different, you’ve just got yourself a bargaining chip,” she said.

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Tindall also cautioned bargain hunters looking to nab a new low mortgage rate to read all the terms and conditions before signing the dotted line.

“While these rates can often be cracking deals, it’s important to read the fine print, particularly if they’re only for a limited time because you may find that the rate jumps up dramatically after the honeymoon period is over.

While some lenders have launched into 2016 with a rate-cut offensive, others have decided to lift their rates.

RateCity analysis shows that since the New Year, over 50 home loan products have gone up by as high as 0.89 percentage points.

These rate hikes are very different to the rate cuts, in that they are generally applied to all customers.

ING Direct have decided to hedge their bets each way after announcing back in November they were lifting their rates by 18 basis points, in line with the rise adopted by all the major banks.  Since then, Mortgage Business reports they won’t apply this hike for new customers, provided they are owner-occupiers with a deposit of 20 per cent or more. Existing owner-occupier customers with loans of $150,000 or more get a smaller discount of 6 basis points which will leave them at a net rate hike of 12 basis points.

RateCity.com.au shows advertised variable rates start from 3.89 per cent, and 3-year fixed rates from 3.89 per cent. For a full list of mortgage interest rates click here.

Lenders who have cut their lowest rate or applied special deal to lowest rate


Product name

New rate

Old rate


AMP Bank

Essential Variable




Beyond Bank

Low Rate Special




Click Loans

Online Offset Home Loan 70%





3 yr Platinum Fixed Rate Investors <80% LVR




Mortgage House

Easy Start Variable 1 yr




Suncorp Bank

Home Package Plus Special Fixed Owner Occ 3 yr




Related links:Source: ratecity.com.au

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