A customer-owned bank just cut a fixed home loan down to 2.12%

author-avatar By on June 12, 2020
A customer-owned bank just cut a fixed home loan down to 2.12%

By WikiWookie on Wikimedia Commons

BCU cut its two-year fixed home loan down to 2.12% p.a today (3.78% p.a comparison rate*).

This represents a 13 basis point (bps) cut, and for that rate you'll need to be an owner-occupier paying principal and interest (P&I). 

BCU's three-year fixed rate also saw an 11 basis point cut down to 2.16% p.a. (3.63% p.a. comparison rate*). 

BCU's 'OMG! Variable Rate P&I' loan also saw a 25 basis point cut to 2.69% p.a. (2.69% p.a. comparison rate*)

These cuts generally follow on from other lenders nudging closer to the unicorn 1% advertised rate threshold, while some seem to be cutting the most for 'safer' borrowers, like those refinancing or those who have a high deposit.

Back to BCU, and the home loans that saw the biggest cuts were to its investment loans, paying both interest only (IO) and P&I.

  • Investment Fixed P&I 2 Years: 65 basis point cut to 2.39% p.a. (3.96% p.a. comparison rate*)
  • Investment Fixed P&I 3 Years: 62 basis point cut to 2.44% p.a. (3.82% p.a. comparison rate*)
  • Investment Fixed IO 2 Years: 57 basis point cut to 2.49% p.a. (3.98% p.a. comparison rate*)
  • Investment Fixed IO 3 Years: 54 basis point cut to 2.54% p.a. (3.85% p.a. comparison rate*)

Why the high comparison rate? One of the biggest factors is it assumes after the fixed term ends, you'll go on to the standard variable rate (SVR), rather than refinance or ask for a better deal.

BCU's investment P&I SVR is 4.30% p.a. (same comparison rate*).

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.

Provider
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Budget Home Loan OO P&I
2.68% 2.74% $1,618 Go to site
2.89% 2.89% $1,663 More details
2.39% 2.40% $1,558 More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 14 July 2020. View disclaimer.

Newcastle Permanent raises home loans by 10 basis points

On Wednesday, Newcastle Permanent raised the interest rate on many of its home loans paying both IO and P&I for owner-occupiers and investors.

This theme of lenders bumping up the rate a little isn't new, given the likes of ANZ and ME Bank did so not too long ago.

For Newcastle Permanent, some of the 10 basis point bumps are below:

  • Investment Fixed P&I 1 Year: Now 3.09% p.a. (4.49% p.a. comparison rate*)
  • Investment Fixed P&I 2 Years: Now 3.14% p.a. (4.36% p.a. comparison rate*)
  • Residential Fixed P&I 1 Year: Now 2.49% p.a. (4.12% p.a. comparison rate*)
  • Residential Fixed P& 2 Years: Now 2.54% p.a. (3.98% p.a. comparison rate*)

Three, four and five-year fixed rates also saw a rise, so too did its 'Premium Plus Package' home loans.

In the residential space, you can expect to pay a 50bps premium by going interest-only, while for investors the advertised rate tends to stay the same.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Harrison joined Savings in 2020. He is a journalist with more than four years of experience, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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