Construction home loan rates cut on back of HomeBuilder grant

author-avatar By 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
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
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
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
VariableMore details
FREE REDRAW FACILITY

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

FREE REDRAW FACILITY
VariableMore details
AN EASY ONLINE APPLICATION

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

  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraws
AN EASY ONLINE APPLICATION

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

  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraws
VariableMore details

Construction Home Loan (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • No ongoing fees
  • Unlimited extra repayments

Construction Home Loan (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • No ongoing fees
  • Unlimited extra repayments
VariableMore details

Rocket Repay Home Loan (Interest Only)

VariableMore details

Standard Variable Home Loan (Interest Only)

VariableMore details

Standard Variable Home Loan (Interest Only)

VariableMore details

Standard Variable Rate Home Loan (Principal & Interest)

VariableMore details
FAST TURNAROUND TIMES AND FLEXIBLE LOAN OPTIONS

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

FAST TURNAROUND TIMES AND FLEXIBLE LOAN OPTIONS

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 18, 2021. 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
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
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
REFINANCE IN MINUTES, NOT WEEKS

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

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

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

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

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

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

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

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
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.^

Rates correct as of October 18, 2021. 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 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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