Greater Bank has become the 10th mortgage lender to put forward an interest rate below 2 per cent.
An interest rate below 2 per cent was first introduced as recently as 10 weeks ago, meaning that on average, one lender per week has slashed its home loan rate to under 2 per cent.
The Newcastle-based mutual bank has today reduced its one-year fixed interest rate by 0.10 per cent to 1.99 per cent for principal and interest (P&I) home loans.
Rates on Greater Bank’s interest-only fixed-rate mortgages were also given the same discount as their P&I counterparts, bringing the rate to 2.09 per cent.
New and existing home loan customers wanting to refinance to a fixed rate mortgage may be eligible for the rates, which are only open to borrowers in NSW, ACT and Queensland.
Greater Bank gears up for tougher competition
The Reserve Bank of Australia’s (RBA) historic low cash rate has held steady since March, providing low-cost funding to the lender and more affordable interest rates to borrowers, Greater Bank’s chief executive officer, Scott Morgan, said.
“It’s hard to believe that the market now offers a fixed-term rate with a ‘1’ at the start, such is the time we are living,” he said.
“What this does is provide an opportunity for new and existing customers to look at their current financial position and considering fixing their home loan.”
Mr Morgan said Greater Bank will be “very competitive” against major lenders within the fixed home loan market.
“As a customer-owned bank, we don’t have shareholders meaning our financial interests are firmly aligned with the needs of our customers. It is this alignment of interests that allows us to offer one of the most affordable one-year fixed rate home loans in the market,” he said.
Mortgage rates continue to dive
Home loan rates have been in steady decline since March when the RBA slashed the cash rate twice in one month to 0.25 per cent, in response to COVID-19.
RateCity analysis shows that by refinancing to a variable rate of under 2 per cent, an average mortgage holder could potentially save hundreds per month, after fees.
If an owner-occupier who:
- has a $400,000 home loan paying principal and interest,
- is on a 25-year loan term, and
- is on the RBA’s average existing owner-occupier rate of 3.22 per cent
refinanced to a 1.99 per cent loan, they could potentially save about $250 a month, factoring in a one-off $350 discharge fee.
And for mortgage holders who are not eligible for sub-2 per cent rates or want to do their due diligence, 83 lenders on the RateCity database are offering owner-occupier rates below 2.5 per cent.
The lowest variable rate is 1.95 per cent, from Easy Street Financial Services, though it only applies to loans of more than $750,000.
Reduce Home Loans has the lowest fixed rate at 1.90 per cent, which borrowers will have locked in for one year.
The first lender to put a 1 in front of its home loan rate was Bank of Us, which made the record-breaking move in late June.
The 10 lenders offering rates under 2%
Note: Hume Bank rate is only available to new loans for renovation or construction of new properties within 150 km of Albury Post Office. Loans.com.au product is an introductory variable rate – 1.99% for one year after which it reverts to 2.57%. Data accurate as of September 8, 2020.
Big four banks – lowest rates
Note: Rates are for owner occupiers paying principal and interest. *Westpac’s rates are for customers with a loan-to-value ratio of less than 70 per cent. Data accurate as of September 8, 2020.