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
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
  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraws
AN EASY ONLINE APPLICATION
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. *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 22, 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
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
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 22, 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 is passionate about breaking down complex financial topics for the everyday consumer.

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