No lender has taken the 1% jump yet, but several in the past week have cut home loans to rates as low as 2.09% p.a.
Major banks and the big four got a lot of the accolades in the past two weeks, with ING, ANZ, NAB, Westpac and CommBank all cutting fixed rates to the low-2% p.a. range.
But in the past week it was the smaller lenders' time to shine, with institutions such as Freedom Lend, Unibank, UBank and others making significant home loan rate cuts.
Once again, fixed home loans got most of the love as lenders look to secure customers amid the coronavirus crisis.
Many also made deep cuts to interest-only (IO) products, as opposed to principal and interest (P&I) - the considerations to make when switching to IO can be found here.
The new fixed rate offers on the market compare favourably with some of the lowest variable rates available.
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 12 August 2020. View disclaimer.
Freedom Lend cut its 'Freedom Fixed P&I' loan, fixed for two years at 80% LVR by 25 basis points.
That brings its advertised rate down to 2.09% p.a. (2.68% p.a. comparison rate*).
This is advertised as a 'Special Offer', meaning the special rate can be withdrawn at any time.
Unibank made a 52 basis point cut to its two and three year fixed home loans for owner occupiers down to an advertised rate of 2.14% p.a.
The comparison rate* for the two-year loan is 4.01% p.a., and for three years its 3.83% p.a.
Investors also got some love, with Unibank also cutting by 52 basis points on two and three year fixed loans down to 2.29% p.a. (4.04% p.a. for two years, 3.87% p.a. for three years comparison rates*)
Beyond Bank cut its 'Total Home Loan Package' fixed 'rate for three years by 50 basis points, down to 2.29% p.a. (3.81% p.a. comparison rate*)
This is also a 'special offer', and can be withdrawn at any time.
IMB made cuts to its owner occupier loans paying P&I for two and three years up to a maximum LVR of 90%:
- The one year fixed rate saw a 45 basis point cut down to 2.29% p.a. (3.19% p.a. comparison rate*)
- The two years' fixed rate saw a 40 basis point cut also down to 2.29% p.a. (3.12% p.a. comparison rate*)
Queensland Country Bank
As a special offer, Queensland Country Bank cut its two-year package home loan by 20 basis points down to 2.29% p.a. (3.84% p.a. comparison rate*).
UBank made quite a few cuts to its fixed home loans, with the lowest advertised rates attached to its one and three year fixed home loans, paying P&I.
The cuts were:
- UHomeLoan Fixed P&I 1 Year: 45 basis point cut to 2.29% p.a. (3.12% p.a. comparison rate*)
- UHomeLoanFixed P&I 3 Years: 40 basis point cut to 2.29% p.a. (2.90% p.a. comparison rate*)
These home loans have a 20% minimum deposit requirement.
Greater Bank made a raft of cuts to its fixed products.
Most noteworthy was a 40 basis point cut to the 'Great Rate' product, fixed for one year at a special rate of 2.39% p.a. (3.56% p.a. comparison rate*).
The 'Ultimate' home loan fixed for one year also saw a 40 basis point cut to 2.39% p.a. (3.78% p.a. comparison rate*).
The main difference between the 'Ultimate' and 'Great Rate' products is that the Ultimate products come with an offset account.
These home loans are for a maximum LVR of 90%, paying P&I - interest-only loans attract a 10 basis point premium over their P&I counterparts.
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.
- 'Fear of the unknown' as consumer confidence collapses
- COVID-19 sees lowest ever wages growth recorded in June quarter
- CBA full-year results: Loan deferrals falling, cash deposits rising
- Athena cuts home loan rates as you pay down your loan
- Baby Boomers drove home renovations prior to HomeBuilder and COVID-19