BOQ and Virgin Money cut home loan rates to record lows

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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

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • 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%
UNLIMITED REDRAWSSPECIAL 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%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • 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
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *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. Rates correct as of May 24, 2022. 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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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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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