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Home loans hit a new record low of 1.69%

Home loans hit a new record low of 1.69%

Greater Bank has today claimed the new lowest home loan rate in Australia – 1.69 per cent, fixed for 1 year.

But borrowers will need to shop around or refix their rate after the first year as the loan reverts to a variable rate of 3.66 per cent.

Greater Bank home loans are only available for borrowers in NSW, ACT and Queensland.

RateCity analysis shows if an owner-occupier with a $400,000 home loan switched from the average existing owner-occupier rate of 3.05 per cent, to this new rate from Greater Bank, they could potentially save $5,039 in the first year, including refinancing costs.

However, after five years borrowers could be $3,849 worse off, unless they switch or refix their loan.

Cost of $400k home loan (interest plus fees)

Existing customer rate 3.05%Greater Bank Great Rate: 1.69% (then 3.66%)Difference
1st year$12,049$7,010-$5,039
2nd year$23,763$21,004-$2,759
3rd year$35,132$34,617-$515
4th year$46,144$47,833$1,689
5th year$56,789$60,638$3,849

Notes: based on an owner occupier paying principal and interest, switching loans 5 years into a 30 year home loan with a balance of $400K. Assumes the customer does not refix / refinance after the 1 year fixed rate expires. Refinancing costs include discharge fees but not government fees.

RateCity data shows 24 lenders have cut 317 home loan rates since 1 January.

Sally Tindall, research director at RateCity, said: “Although the momentum has slowed, some low-cost lenders are still shaving their rates to attract new business in the door.”

“Other low-cost lenders could challenge this rate in the coming months as they battle it out for the coveted title of Australia’s lowest rate mortgage,” she said.

“At 1.69 per cent this is the lowest home loan rate we’ve ever seen, but it’s important to remember that it only lasts for one year.

“While the revert rate is more than double the fixed rate, borrowers could still potentially be better off if they keep on their toes and re-fix, refinance or renegotiate after the first year.

“If you do decide to take up a fixed rate, diarise the end date and make sure you canvas your options before it expires,” she said.

RateCity.com.au database analysis:

  • 24 lenders have cut 317 home loan rates since Jan 1
  • 8 lenders have hiked 51 home loan rates since Jan 1
  • 52 lenders have home loan rates under 2%, including three of the big four banks
  • 1.69% is the lowest fixed rate (1-year)
  • 1.79% is the lowest variable rate

Lowest home loan rates on RateCity

Loan typeLenderAdvertised rate
VariableHomestar Finance 1.79%
1-yearGreater Bank (NSW, QLD, ACT only)1.69%
2-yearHSBC, Homestar Finance1.88%
3-yearUBank1.75%
4-yearWestpac, St George, Bank of Melbourne1.89%
5-yearAussie1.99%

Source: RateCity. Data accurate as of 09/02/2021.

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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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