Home loans under 2% - June 2022

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on June 01, 2022
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Home loans under 2% - June 2022

Despite home loan interest rates generally trending up and the Reserve Bank cash rate increasing, there are still a number of home loans under 2%.

When the Reserve Bank's cash rate hit a historic low of 0.10% in November 2020, many banks and lenders responded by slashing home loan rates to their lowest ever. The major banks were some of the first responders, sharply decreasing rates particularly on three and four-year fixed home loans. Smaller lenders also cut sharply.

In Savings.com.au's market research there were at one stage more than 50 lenders with a home loan under 2%, and the lowest advertised rate seen was 1.59% p.a.

However, funding costs to banks and lenders are increasing - and so are home loan rates. The Reserve Bank increasing the cash rate, starting in May 2022, also pushed a lot of home loan rates up.

Since a lot of lenders increased rates effective mid-May 2022, the selection pool of home loans starting with a 1 is very tight, so what's a borrower to do? Luckily there are still a handful of lenders offering competitive home loan deals.

Compare home loans under 2%

There are quite a few lenders offering home loans under the 2% threshold, including larger banks, challenger banks, non-bank lenders, and customer-owned banks. These home loans are usually available across fixed or variable terms with a variety of loan-to-value ratios (LVRs). Owner occupiers get the lion's share of home loan rates starting with a 1, however there are a handful for investors.

Be sure to also compare features of the home loan, including whether it comes with an offset account or redraw facility, and if it's a packaged home loan. Also note the varying conditions between each product as well as the different comparison rates. This will be indicative of the extra fees you have to pay, such as a loan establishment fee, monthly or yearly account keeping fees and so on.

The pendulum is swinging back to variable home loans, clawing back market share where at one stage nearly half of all new home loans were fixed. Variable home loans offer flexibility, often with the ability to pay unlimited extra amounts into the home loan, while also coming with extra features such as offset accounts. That said, there are still a handful of fixed home loans under 2% for those who prefer repayment certainty.

Lender

Fixed
More details

Total Home Loan Package Home Loan Fixed Special 2 Years (LVR < 60%)

    Variable
    More details

    Expect More Home Loan Campaign Special (LVR < 70%) (New Customer)

      Fixed
      More details

      First Home Buyer Fixed Special (New Customer) 3 Year

        Fixed
        More details

        The Works 2 years fixed Special (Principal and Interest)

          Fixed
          More details

          Fixed Rate Home Loan 2 Year Special

            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 January 10, 2022. View disclaimer.

            Home Loans Under 2% for Small Deposits

            Many of the home loans with the lowest advertised rates are generally for borrowers with 20% or greater deposits. If you have a smaller deposit, say 10% (i.e. 90% LVR) your options could be limited. However, there are a handful of lenders available - with some even offering home loans under 2% with as little as 5% deposit - as seen below.

            Lender

            Fixed
            More details

            First Home Buyer Fixed Special (New Customer) 3 Year

              Fixed
              More details

              Fixed Rate Home Loan 2 Years

                Fixed
                More details

                First Home Buyer 2 Year Fixed Rate Special (Principal and Interest)

                  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 November 12, 2021. View disclaimer.

                  Investor home loans under 2%

                  As it stands, there are very few lenders catering towards the investment space with advertised rates under 2% p.a. Most tend to hover around the low-2% range. Below is a selection of some of the most competitive home loans in the investment space.

                  Lender

                  Variable
                  More details
                  GREAT INTEREST RATE
                  • Option to add an offset for 0.10%
                  • No monthly or ongoing fees
                  • Unlimited redraws
                  GREAT INTEREST RATE

                  Smart Booster Investor Bundle (Principal and Interest)

                  • Option to add an offset for 0.10%
                  • No monthly or ongoing fees
                  • Unlimited redraws
                  Variable
                  More details
                  GET A FULL OFFSET ACCOUNT FOR NO EXTRA COST
                  • No upfront or ongoing fees
                  • 100% full offset account
                  • Extra repayments + redraw services
                  GET A FULL OFFSET ACCOUNT FOR NO EXTRA COST

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

                  • No upfront or ongoing fees
                  • 100% full offset account
                  • Extra repayments + redraw services
                  Variable
                  More details
                  GET APPROVED FASTER WITH A DIGITAL APPLICATION
                  • Split Loan Option
                  • Unlimited additional repayments
                  • Free redraw facility
                  GET APPROVED FASTER WITH A DIGITAL APPLICATION

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

                  • Split Loan Option
                  • Unlimited additional repayments
                  • Free redraw facility
                  Variable
                  More details
                  AN EASY ONLINE APPLICATION
                  • Split Loan Option
                  • Unlimited additional repayments
                  • Free redraw facility
                  AN EASY ONLINE APPLICATION

                  Yard Investment Loan (Principal and Interest) (LVR < 80%)

                  • Split Loan Option
                  • Unlimited additional repayments
                  • Free redraw facility
                  Variable
                  More details
                  FREE REDRAW FACILITY
                  • Pay more to reduce the amount of interest you pay
                  • Easily access additional funds in your redraw
                  • Great rates and low fees
                  FREE REDRAW FACILITY

                  Basic Investment Loan (Principal and Interest) (LVR < 60%)

                  • Pay more to reduce the amount of interest you pay
                  • Easily access additional funds in your redraw
                  • Great rates and low fees
                  Variable
                  More details
                  • Pay more to reduce the amount of interest you pay
                  • Easily access additional funds in your redraw
                  • Great rates and low fees

                  Mortgage Simplifier Investment Loan (Principal and Interest) ($150k-$500k)

                  • Pay more to reduce the amount of interest you pay
                  • Easily access additional funds in your redraw
                  • Great rates and low fees
                  Variable
                  More details
                  • Pay more to reduce the amount of interest you pay
                  • Easily access additional funds in your redraw
                  • Great rates and low fees

                  Home Value Investment Loan (Principal and Interest) (LVR < 70%)

                  • Pay more to reduce the amount of interest you pay
                  • Easily access additional funds in your redraw
                  • Great rates and low fees
                  Variable
                  More details
                  UNLIMITED EXTRA REPAYMENTS
                  UNLIMITED EXTRA REPAYMENTS

                  Budget Investment Loan (Principal and Interest) (LVR 80%-90%)

                    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 June 29, 2022. View disclaimer.

                    Why does the comparison rate matter?

                    It’s all well and good to have a home loan with an advertised rate of less than 2.00% p.a. However, arguably the more important figure to look at is the comparison rate. While the advertised rate determines your base monthly repayment, it doesn’t take into account a few other things, which is where the comparison rate steps in.

                    For fixed loans, comparison rates also take into account revert rates, which explains why many fixed-rate and introductory-rate loans tend to have a much higher comparison rate relative to the advertised rate.

                    The comparison rate also accounts for yearly fees, monthly fees, package fees, settlement fees, exit fees and a myriad of other fees, such as for offset accounts and so on. The comparison rate, in Australia, is also based on a $150,000 loan for a 25-year term, in many circumstances. By some measurements the median house price in Australia's capital cities has surpassed $1 million, so this figure might not mean much to you.

                    Lenders with home loans under 2%

                    Below is a list of lenders that offer or have previously offered home loans with advertised rates below the 2% mark.

                    ANZ

                    CommBank

                    Westpac

                    NAB

                    86 400

                    Adelaide Bank

                    AMP Bank

                    Aussie

                    Bank Australia

                    Bank First

                    Bank of Melbourne

                    Bank of Queensland (BOQ)

                    BankSA

                    Bankwest

                    BankVic

                    BCU

                    Bendigo Bank

                    Citi

                    Credit Union SA

                    Great Southern Bank (formerly CUA)

                    Endeavour Mutual

                    Freedom Lend

                    G&C Mutual

                    Greater Bank

                    Homeloans.com.au 

                    Homestar Finance

                    HSBC

                    Hume Bank

                    Illawarra Credit Union

                    IMB Bank

                    ING

                    LCU (Laboratories Credit Union)

                    loans.com.au

                    ME Bank

                    Mortgage House

                    MOVE Bank

                    Nano

                    Newcastle Permanent

                    Northern Inland Credit Union

                    P&N Bank

                    Pacific Mortgage Group

                    People's Choice Credit Union

                    QBANK

                    Queensland Country Bank

                    RACQ Bank

                    RAMS

                    Reduce Home Loans

                    St.George Bank

                    South West Slopes Credit Union

                    Suncorp Bank

                    Sydney Mutual

                    Teachers Mutual Bank

                    Tic:Toc

                    UBank

                    Virgin Money

                    WLTH

                    Yard

                    First published 26 August 2020, last updated 19 May 2022.


                    Photo by Jonny_Joka on Pixabay

                    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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                    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 strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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