Challenger lenders edge closer to 1% fixed home loans

author-avatar By 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%
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.^
FixedMore details
NO UPFRONT OR ONGOING FEES

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

NO UPFRONT OR ONGOING FEES

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. Rates correct as of October 17, 2021. 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 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
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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