There’s a new lowest fixed home loan rate in Australia, and borrowers may need to act fast if they want to snatch it up.

UBank, a subsidiary of NAB, is offering home loan customers a new rock-bottom 3-year fixed rate of only 1.75 per cent (2.22 per cent comparison rate). The rate is for owner-occupiers paying principal and interest.

The interest rate – the new lowest in the country – will only be available for a limited time. Customers have until February 26^th to apply, and settle the loan application within 90 days, to be eligible.

According to the RBA, the average existing owner-occupier home loan rate is 3.09 per cent. RateCity research has found that the average owner-occupier rate paying 3.09 per cent interest could be looking at saving $268 in monthly repayments, or $3,220 in the first year just by switching to this new rate.

This may mean the difference in paying the household electricity bill or even saving for a domestic family holiday.

Savings by switching to UBank fixed rate loan

	Interest rate	Monthly repayments	Interest and fees paid over 3-year fixed term
Existing customer	3.09%	$1,916	$35,600
UBank customer	1.75%	$1,647	$20,356
*Savings*	1.34%	$268	$15,244

Source: RateCity.com.au, RBA.gov.au.

Note: This is based on a hypothetical owner-occupier paying principal and interest with a $400,000 balance outstanding, 5 years into a 30-year home loan. The borrower refinances to this new loan with a 25-year loan term. Figures also factor in $350 discharge fee.

How does this new rate compare to the big four?

This trend of rock-bottom interest rates is not new. RateCity research shows there are currently 25 lenders offering 3-year fixed rates under 2 per cent.

The current low-rate environment has been bolstered by three Reserve Bank of Australia cash rate cuts, bringing it down to a new low of 0.10 per cent. Since the last cut in November, 93 lenders have slashed home loan rates more than once.

This new lowest fixed rate from UBank is 0.24 percentage points lower than the lowest 3-year fixed rate offering from a big four bank – 1.99 per cent from Westpac.

In terms of all 3-year fixed rates offered by the big four banks, 1.75 per cent from UBank may be a competitive option for borrowers looking to keep their ongoing repayments down.

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%	2.19%	2.79%	2.29%
Lowest variable rate	2.69%	2.19% (for 2 years, then 2.69%)	2.69%	2.72%

Source: RateCity.com.au. Data accurate as of 21.01.2021.

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

Is a home loan right for me?

It’s worth keeping in mind that you do your own research around any financial products before applying. There are a few questions any responsible homeowner may want to ask themselves if they’re considering switching to a fixed rate mortgage.

Are there any fees involved, including switching fees and new ongoing fees?
What features, if any, does the home loan offer? Will you be losing features (such as an offset account) if you switch?
What is your plan for the property? If you’re looking to sell within the fixed rate period, it may not suit you.
Will you need to unbundle any packaged products, such as credit cards, from your current home loan?
Does the new lender suit you? For example, if you rely on face-to-face customer service, are there branches nearby?

Lowest owner-occupier rates on RateCity

	Lender	Advertised rate
Variable	Reduce Home Loans	1.77%
1-year fixed	Tic Toc, Greater Bank, RACQ, Hume Bank	1.89%
2-year fixed	HSBC, Homestar Finance	1.88%
3-year fixed	UBank	1.75%*
4-year fixed	Westpac, St George, Bank of Melbourne	1.89%
5-year fixed	Aussie	1.99%

Source: RateCity.com.au. *Home loan available as of 22.01.2021.

Note: Home loans above are available Australia-wide. LVR restrictions may apply.

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