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.
- Owner Occupier Home Loans Under 2%
- Home Loans Under 2% for Small Deposits
- Investor Home Loans Under 2%
- Why Does the Comparison Rate Matter?
- Full List of Lenders
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 | ||||||||||||
| FEATUREDGREAT INTEREST RATE | Smart Booster Investor Bundle (Principal and Interest)
| ||||||||||||
Smart Booster Investor Bundle (Principal and Interest)
| |||||||||||||
| Variable | More details | ||||||||||||
| FEATUREDGET A FULL OFFSET ACCOUNT FOR NO EXTRA COST | Low Rate Home Loan - Prime (Principal and Interest) (Investment) (LVR < 60%)
| ||||||||||||
Low Rate Home Loan - Prime (Principal and Interest) (Investment) (LVR < 60%)
| |||||||||||||
| Variable | More details | ||||||||||||
| FEATUREDGET APPROVED FASTER WITH A DIGITAL APPLICATION | Neat Variable Investment Loan (Principal and Interest) (LVR < 60%)
| ||||||||||||
Neat Variable Investment Loan (Principal and Interest) (LVR < 60%)
| |||||||||||||
| Variable | More details | ||||||||||||
| AN EASY ONLINE APPLICATION | Yard Investment Loan (Principal and Interest) (LVR < 80%)
| ||||||||||||
Yard Investment Loan (Principal and Interest) (LVR < 80%)
| |||||||||||||
| Variable | More details | ||||||||||||
| FREE REDRAW FACILITY | Basic Investment Loan (Principal and Interest) (LVR < 60%)
| ||||||||||||
Basic Investment Loan (Principal and Interest) (LVR < 60%)
| |||||||||||||
| Variable | More details | ||||||||||||
Mortgage Simplifier Investment Loan (Principal and Interest) ($150k-$500k)
| |||||||||||||
Mortgage Simplifier Investment Loan (Principal and Interest) ($150k-$500k)
| |||||||||||||
| Variable | More details | ||||||||||||
Home Value Investment Loan (Principal and Interest) (LVR < 70%)
| |||||||||||||
Home Value Investment Loan (Principal and Interest) (LVR < 70%)
| |||||||||||||
| Variable | More details | ||||||||||||
| 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
