Construction home loan rates cut on back of HomeBuilder grant

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on July 24, 2020
Construction home loan rates cut on back of HomeBuilder grant

Photo by Troy Mortier on Unsplash

Some lenders have cut interest rates for construction loans, with one cutting by 50 basis points.

Both Qudos Bank and Freedom Lend made adjustments to construction home loan rates in the past week in a possible bid to attract HomeBuilder grant recipients. 

The $25,000 HomeBuilder grant is available for people building a home up to the value of $750,000 including land value.

Qudos Bank's cuts were:

  • Construction Home Loan 80%: 50 basis point cut to 2.89% p.a. (2.93% p.a. comparison rate*)
  • Construction Home Loan 90%: 50 basis point cut to 2.99% p.a. (3.03% p.a. comparison rate*)

Qudos Bank also made cuts to its investment construction loans, but investment properties are not eligible for HomeBuilder.

Meanwhile, Freedom Lend made a smaller cut by 3 basis points to its construction loan, down to 2.68% p.a. (2.70% p.a. comparison rate*)

This rate is applicable for both 80% and 90% LVR borrowers, which is unusual given lenders usually charge a higher rate if borrowers have a smaller deposit.

Compared to others in the construction loan market, this is how these two lenders stack up:

Lender

Variable
More details
GET A DISCOUNTED GREEN RATE
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
GET A DISCOUNTED GREEN RATE

Green Construction Home Loan (Interest Only)

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Variable
More details
100% FULL OFFSET ACCOUNT
100% FULL OFFSET ACCOUNT

Offset Package Home Loan (Principal and Interest) (LVR < 60%)

    Variable
    More details
    BUNDLE YOUR HOME LOAN AND YOUR INVESTMENT LOAN FOR MORE SAVINGS
    BUNDLE YOUR HOME LOAN AND YOUR INVESTMENT LOAN FOR MORE SAVINGS

    Yard Investor Bundle Loan (Bundled with Home Loan)

      Variable
      More details
      AN EASY ONLINE APPLICATION
      AN EASY ONLINE APPLICATION

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

        Variable
        More details
        100% FULL OFFSET ACCOUNT
        100% FULL OFFSET ACCOUNT

        Offset Package Home Loan (Principal and Interest) (LVR 60%-70%)

          Variable
          More details
          GREAT FLEXIBLE LOAN OPTIONS
          GREAT FLEXIBLE LOAN OPTIONS

          Basic Home Loan (Principal and Interest) (LVR 70%-80%)

            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

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

            • Pay more to reduce the amount of interest you pay
            • Easily access additional funds in your redraw
            • Great rates and low 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 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 26, 2022. View disclaimer.

            The 2% barrier got breached again

            Earlier in the week, challenger brand loans.com.au introduced a home loan with a variable interest rate below the 2.00% p.a. barrier, down to 1.99% p.a. (2.55% p.a. comparison rate*).

            The sub-2% rate is available for the first year, before the rate then reverts to 2.57% p.a.

            The online lender also launched a two year discounted variable rate of 2.09% p.a.(2.71% p.a comparison rate*) which reverts to 2.79% p.a. after two years.

            Both products are limited to borrowers with a maximum LVR of 80%, with a maximum loan amount of $1 million. 

            This is how loans.com.au's 1.99% p.a. introductory home loan stacks up against other competitive variable-rate home loans on the market:

            Lender

            Variable
            More details
            UNLIMITED REDRAWSSPECIAL OFFER
            • 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%
            UNLIMITED REDRAWSSPECIAL 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%
            Variable
            More details
            100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
            • 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
            Variable
            More details
            NSW/VIC/SA METRO & INNER REGIONAL AREAS
            NSW/VIC/SA METRO & INNER REGIONAL AREAS

            Variable Home Loan (Principal and Interest)

            • $5000 Cashback. T&Cs Apply.
            Variable
            More details
            REFINANCE ONLY
            • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
            REFINANCE ONLY

            Variable Rate Home Loan – Refinance Only

            • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
            Variable
            More details
            NO ONGOING FEESFREE REDRAW FACILITY
            • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
            NO ONGOING FEESFREE REDRAW FACILITY

            Live-in Variable Loan (Principal and Interest) (LVR < 90%)

            • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

            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 26, 2022. View disclaimer.

            At the end of June, Bank of Us also breached the 2.00% barrier with 1.99% fixed rates across a suite of fixed-rate terms, although these are only available for Tasmanian residents.

            Hobart was one of the only capital cities to record a home price growth in the June quarter, according to a Domain report, and had the second-strongest home price growth at 10% on the year, with Sydney in first.

            Community First and Horizon Bank continue customer-owned cutting trend

            In continuing the trend of customer-owned institutions cutting home loan rates, on Monday Community First virtually scrubbed the fixed home loan deck, making a wide variety of cuts by 20 basis points.

            Some of its freshly cut rates include:

            • Fixed P&I 3 Years: Down to 2.49% p.a. (3.56% p.a. comparison rate*)
            • Accelerator Package Fixed P&I 3 Years: Down to 2.34% p.a. (3.80% p.a. comparison rate*)
            • Investment Fixed P&I 3 Years: Down to 2.79% p.a. (3.86% p.a. comparison rate*)
            • Inv Accelerator Package Fixed 3 Years: Down to 2.64% p.a. (4.09% p.a. comparison rate*)

            Yesterday, Horizon Bank cut a few fixed rates for investors and owner-occupiers by 30 basis points. The new rates are:

            • Fixed 1 Year: Down to 2.69% p.a. (3.45% p.a. comparison rate*)
            • Fixed 2 Years: Down to 2.69% p.a. (3.38% p.a. comparison rate*)
            • Inv Fixed 1 Year: Down to 2.94% p.a. (3.69% p.a. comparison rate*)
            • Inv Fixed 2 Years: Down to 2.94% p.a. (3.63% p.a. comparison rate*)

            CommBank has reported a spike in fixed rate lending in recent months, with around 40% of all new owner-occupier loans at fixed rates.


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

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