Challenger lenders edge closer to 1% fixed home loans

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on April 09, 2020
Challenger lenders edge closer to 1% fixed home loans

Photo by Erik Dungan on Unsplash

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.

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%
FixedMore details
NO UPFRONT OR ONGOING FEES

Basic Home Loan Fixed (Principal and Interest) (LVR < 70%) 3 Years

NO UPFRONT OR ONGOING FEES
FixedMore details
  • Easy, digital application process
  • Market leading app to help you pay off your loan sooner
  • No on-going fees
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
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

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

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

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

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

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 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 January 18, 2022. View disclaimer.

Freedom Lend

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

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

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

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

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

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.


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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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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