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Greater Bank offering 3.59% interest-only loans

Greater Bank offering 3.59% interest-only loans

There are still a surprising number of lenders offering interest-only rates under 4 per cent, a new study of the mortgage market has found.

At the end of July 2018, the average rate for all the variable, owner-occupied,interest-only mortgageslisted on RateCity was 4.77 per cent.

This compares to an average rate of 4.39 per cent at the end of March 2017, which was when APRA, the banking regulator, called on lenders to limit their interest-only lending.

Greater Bankhas a one-year fixed-rate interest-only loan that starts at 3.59 per cent, although the comparison rate is 4.67 per cent.

Mortgage House,CUA,Homestar Finance,Newcastle Permanent, Move Bank,BCU,Suncorp BankandState Custodiansare some of the other Australian lenders that offerinterest-only mortgagesfor less than 4 per cent.

Here are some of the cheapest interest rates in Australia for owner-occupiers who want a $400,000interest-only mortgage with a 30-year term and a maximum loan-to-value ratio (LVR) of 80 per cent:

LenderProductAdvertised rateComparison rate
Greater BankUltimate Home Loan (1yr fixed)3.59%4.67%
Mortgage HouseAffordable First Home Buyer Special3.64%3.68%
Homestar FinanceVariable Owner Occupied Home Loan3.74%3.79%
CUABalanced Variable (construction)3.75%3.67%
Newcastle PermanentPremium Plus Package (1yr fixed)3.79%4.75%
Move BankFlexi Fixed Home Loan (1yr fixed)3.79%4.81%
BCUOMG Home Loan3.89%3.84%
Suncorp BankHome Package Plus (2yr fixed)3.89%4.71%
State CustodiansLow Rate Home Loan3.93%3.94%

Please note that the cheapestinterest-only home loanmay not be the bestinterest-only home loanfor your situation.

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This article was reviewed by Head of Content Leigh Stark before it was published as part of RateCity's Fact Check process.

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