BOQ and Virgin Money cut home loan rates to record lows

author-avatar By on May 20, 2020
BOQ and Virgin Money cut home loan rates to record lows

Photo by City of Gold Coast on Unsplash

Bank of Queensland has slashed home loan interest rates in an aggressive attempt to expand its mortgage book.

Bank of Queensland (BOQ) cut the rate on its Economy Variable home loan to 2.69% p.a. on Wednesday (2.86% p.a. comparison rate*).

The rate is available to new borrowers only, with a maximum LVR (loan to value ratio) of 70%, and is a discount of 63 basis points on BOQ's regular variable rate. 

BOQ's subsidiary, Virgin Money, also reduced rates on its variable rate home loan by 20 basis points to 2.60% p.a. (2.77% p.a. comparison rate), the lowest mortgage rate ever offered by a BOQ entity. 

The rate is only available to new customers borrowing more than $500,000 who have a minimum deposit of 40%. 

Both mortgages come with redraw facilities and allow unlimited additional repayments. 

To further lure new customers in, Virgin Money has offered $2,500 cashback when refinancing, up from $500 previously. 

BOQ was reached out to for comment regarding the cuts. 

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.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 20, 2021. View disclaimer.

The cuts are clearly aimed at expanding BOQ's mortgage book, which according to the Australian Prudential Regulation Authority (APRA), contracted by $1.35 billion to $28.7 billion in the last four years.

In contrast, during the same period Macquarie and ING expanded their loan books by $20 billion and $13 billion respectively. 

BOQ last made cuts to variable home loan rates in early April in response to the Reserve Bank of Australia's (RBA) first March cash rate cut, announcing it would cut owner-occupier rates by 17 basis points and investor rates by 25 points. 

BOQ and Virgin Money's cuts come shortly after Macquarie made a wide range of cuts last week to both owner-occupier and investment loans.

Macquarie made a 5 basis point cut to its Basic Variable Owner Occupied P&I 60 rate, taking it 2.64% p.a. (2.64% p.a. comparison rate*). 

For investors, Macquarie cut its Basic Variable Investment P&I 60 by 10 basis points to 2.89% p.a. (2.89% p.a. comparison rate*).

Variable rate cuts have been few and far between since the flurry of activity following the RBA's emergency second cash rate cut in March. 

With the central bank announcing the cash rate was at its effective floor at 0.25% and lenders' margins squeezed historically tight due to the COVID-19 induced recession, there is little room for movement on interest rates. 

Instead, lenders have been making numerous cuts to fixed rates, with many of these rates far more competitive than their variable cousins. 

One of the lowest on the market is ING's Orange Advantage Residential 2-year fixed loan which was cut to 2.09% p.a in March (3.77% p,a comparison rate*).


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 2020. They are (in descending order): Great Southern Bank, 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 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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, Performance Drive 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.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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author-avatar
Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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