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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).

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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.

LenderAdvertised rate
VariableReduce Home Loans

1.77%

1-year fixedHomestar Finance/ Newcastle Permanent

1.98%

2-year fixedHSBC

1.88%

3-year fixedUBank

1.95%

4-year fixedWestpac/ St George/ Bank of Melbourne

1.89%

5-year fixedNewcastle 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 

CBAWestpacNAB 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

LenderCutNew lowest variableEffective 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

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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