31 lenders offering home loan rates under 2 per cent

31 lenders offering home loan rates under 2 per cent

A record 31 lenders are offering, or set to offer, at least one mortgage rate under 2 per cent – almost triple the number before last week’s RBA cut.

Already 17 of these lenders have advertised rates under 2 per cent, while a further 14 lenders will make their new rates available in the coming days.

RateCity.com.au database analysis:

  • 41 lenders have so far announced cuts to rates since last Tuesday.
  • Of these, just 5 lenders have passed on variable rate cuts to their existing customers (see list below).
  • 1.77% is the lowest variable rate on the market.
  • 1.88% will be the lowest fixed rate on the market (2-years), effective from 19 November.
  • 31 lenders are set to offer at least one fixed or variable rate under 2%.
  • Australia’s three largest banks now have fixed rates under 2% (CBA, Westpac and NAB).

 

Homeowners can now get 1-5 year fixed loans for under 2%

In an historic first, homeowners can now sign up for a one, two, three, four and five-year fixed loan –for under 2 per cent.

Locking in a rate is becoming an increasingly popular option for Australian mortgage holders, with CBA telling RateCity that around 40 per cent of new loans were fixed, while Westpac has said 28 per cent of their entire loan book is on a fixed rate.

Lowest owner-occupier rates on RateCity.com.au  - Note some rates will become available later this month.

  Lender Advertised rate
Variable Reduce Home Loans

1.77%

1-year fixed Homestar Finance/ Newcastle Permanent

1.98%

2-year fixed HSBC

1.88%

3-year fixed UBank

1.95%

4-year fixed Westpac/ St George/ Bank of Melbourne

1.89%

5-year fixed Newcastle Permanent

1.99%

Source: RateCity.com.au   Home loans above are available Australia-wide. LVR restrictions may apply. HSBC rate available from 19/11. UBank rate available 13/11. Newcastle Permanent rate available 11/11.

 

Big four banks – lowest owner-occupier rates 

  CBA Westpac NAB  ANZ
1 year fixed

2.19%

1.99%

2.19% 

2.09%

2 year fixed

2.14%

1.99%

2.09%

2.09%

3 year fixed

2.14%

1.99%

2.09%

2.09%

4 year fixed

1.99%

1.89%

1.98%

2.29%

5 year fixed

2.99%

2.69%

2.79%

2.29%

Lowest variable rate

2.69%

2.19% for 2 yrs then 2.69%

2.69%

2.72%

Source: RateCity.com.au  Note: Westpac's rates are for a loan to value ratio of 70%.

RateCity.com.au research director Sally Tindall said: “At the beginning of this year, no one would have predicted there would be more than 30 lenders with rates under 2 per cent.”

“It’s no longer just online lenders with low rates. The bigger banks are now starting to steal their thunder offering up fixed rates under 2 per cent,” she said.

“For the average borrower, refinancing to a low fixed rate could save them thousands of dollars a year but locking in is not for everyone.

“Don’t rush into fixing. Make sure you’re happy with the rate but also with the terms and conditions that come with a fixed rate.

“Split loans can be a good option for people looking to take advantage of the record low fixed rates but still want to keep their offset or make extra repayments,” she said.

RateCity Tips: What to consider before committing to a fixed rate mortgage

  • Are you happy with the rate?
  • How many years you want to fix your home loan for?
  • What’s your plan for the property – are you likely to sell?
  • Would a split loan work for your finances? Spilt loans where a portion is variable can often help retain some flexibility in the loan.
  • Do you want to make extra repayments or have the flexibility of an offset?

Lenders passing variable rate cuts onto existing customers

Lender Cut New lowest variable Effective date
Athena Home Loans

-0.15%

2.19%

Nov-03

Homeloans.com.au

-0.15%

2.14%

Nov-06

Me Bank

-0.15%

2.43%

Nov-26

P&N Bank

-0.10%

2.49%

Nov-20

UBank

-0.15%

2.34%

Nov-29

Source: RateCity.com.au

Did you find this helpful? Why not share this news?

Advertisement

RateCity

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy

Advertisement

Learn more about home loans

What is the difference between fixed, variable and split rates?

Fixed rate

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Variable rate

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Split rates home loans

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

What is the difference between a fixed rate and variable rate?

A variable rate can fluctuate over the life of a loan as determined by your lender. While the rate is broadly reflective of market conditions, including the Reserve Bank’s cash rate, it is by no means the sole determining factor in your bank’s decision-making process.

A fixed rate is one which is set for a period of time, regardless of market fluctuations. Fixed rates can be as short as one year or as long as 15 years however after this time it will revert to a variable rate, unless you negotiate with your bank to enter into another fixed term agreement

Variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts however fixed rates do offer customers a level of security by knowing exactly how much they need to set aside each month.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Why should you trust Real Time Ratings?

Real Time Ratings™ was conceived by a team of data experts who have been analysing trends and behaviour in the home loan market for more than a decade. It was designed purely to meet the evolving needs of home loan customers who wish to merge low cost with flexible features quickly. We believe it fills a glaring gap in the market by frequently re-rating loan products based on the changes lenders make daily.

Real Time Ratings™ is a new idea and will change over time to match the frequently-evolving demands of the market. Some things won’t change though – it will always rate all relevent products in our database and will not be influenced by advertising.

If you have any feedback about Real Time Ratings™, please get in touch.

How much information is required to get a rating?

You don’t need to input any information to see the default ratings. But the more you tell us, the more relevant the ratings will become to you. We take your personal privacy seriously. If you are concerned about inputting your information, please read our privacy policy.

How often is your data updated?

We work closely with lenders to get updates as quick as possible, with updates made the same day wherever possible.

Mortgage Calculator, Deposit

The proportion you have already saved to go towards your home. 

Mortgage Calculator, Property Value

An estimate of how much your desired property is worth. 

Mortgage Calculator, Interest Rate

The percentage of the loan amount you will be charged by your lender to borrow. 

Mortgage Calculator, Loan Term

How long you wish to take to pay off your loan. 

What is the average annual percentage rate?

Also known as the comparison rate, or sometimes the ‘true rate’ of a loan, the average annual percentage rate (AAPR) is used to indicate the overall cost of a loan after considering all the fees, charges and other factors, such as introductory offers and honeymoon rates.

The AAPR is calculated based on a standardised loan amount and loan term, and doesn’t include any extra non-standard charges.

What is bridging finance?

A loan of shorter duration taken to buy a new property before a borrower sells an existing property, usually taken to cover the financial gap that occurs while buying a new property without first selling an older one.

Usually, these loans have higher interest rates and a shorter repayment duration.

What happens to your mortgage when you die?

There is no hard and fast answer to what will happen to your mortgage when you die as it is largely dependent on what you have set out in your mortgage agreement, your will (if you have one), other assets you may have and if you have insurance. If you have co-signed the mortgage with another person that person will become responsible for the remaining debt when you die.

If the mortgage is in your name only the house will be sold by the bank to cover the remaining debt and your nominated air will receive the remaining sum if there is a difference. If there is a turn in the market and the sale of your house won’t cover the remaining debt the case may go to court and the difference may have to be covered by the sale of other assets.  

If you have a life insurance policy your family may be able to use some of the lump sum payment from this to pay down the remaining mortgage debt. Alternatively, your lender may provide some form of mortgage protection that could assist your family in making repayments following your passing.

Mortgage Calculator, Loan Results

These are the loans that may be suitable, based on your pre-selected criteria.