Homestar Finance offering one of Australia's lowest ever fixed-rate home loans

author-avatar By on March 17, 2021
Homestar Finance offering one of Australia's lowest ever fixed-rate home loans

The home loan rate war has continued to intensify as prices skyrocket across the country and buyers rush to purchase their dream home.

Homestar Finance has slashed the rate on its two-year owner-occupier fixed rate by 14 basis points to a market leading rate of 1.74% p.a. (2.23% p.a. comparison rate*). 

The offer is available from today, although with a Loan-to-Value Ratio (LVR) of 80%, borrowers will need a minimum 20% deposit to apply. 

The loan has extra repayments of up to $20,000 available each year, free online redraws, multiple loan splits, and the option to make repayments weekly, fortnightly, or monthly.


Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

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%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

According to Savings.com.au research, Homestar has knocked big four lender Westpac, who previously held the lowest two-year fixed rate, off its perch. 

Greater Bank has the lowest fixed-rate on the market overall with a one year fixed-rate of 1.69% p.a (3.49% p.a. comparison rate), while UBank has the lowest three-year fixed rate at 1.75% (2.22% p.a.). 

Homestar also boasts one of the lowest variable rates on the market at 1.79% p.a (1.84% p.a comparison rate). 

While advertised rates can be attractive, the comparison rate and revert rate are often equally important when it comes to fixed-rate mortgages. 

Greater Bank's comparison rate on its one-year fixed-rate may be considered quite high in today's market, while Homestar's comparison rate is still fairly competitive.

In the wake of the most recent Reserve Bank (RBA) cash rate cut in November, the majority of lenders have left variable rates untouched and instead made sweeping cuts to fixed rates. 

With the RBA stating the cash rate is unlikely to be raised before the end of 2024, many borrowers could be considering whether now is a good time to fix.

Resimac slashes rates for self-employed borrowers 

Fellow non-bank lender Resimac has cut interest rates and waived some fees on a range of its low-doc home loans in a bid to support self-employed Aussies to buy property or refinance. 

Low-doc home loans are typically for the self-employed, and usually don't have the same required documentation needed for a home loan like recent payslips and pay summaries. 

Resimac has dropped rates on its Prime Alt Doc owner-occupier making Principal and Interest repayments by 88 basis points to 2.99% p.a. (3.03% p.a). 

Resimac loans are only available through a broker, and borrowers will need an 80% LVR.

The risk fee on the loan has also been waived. 

Resimac General Manager Distribution Daniel Carde said the move was designed to provide self-employed borrowers with access to credit at a time it could make a material difference.

“There are many self-employed Australians who will need more support this year as they get back on their feet and transition back to normality after almost 12 months of disruption,” Mr Carde said.

“Refinance activity was particularly strong in 2020, however many self-employed borrowers were effectively shut out of the market due to the economic uncertainty caused by the pandemic.

"We’re looking to change that in 2021 by reducing our interest rates and removing almost all the entry costs on our range of Prime Alt Doc loans."


Photo by Jaye Haych on Unsplash

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): Credit Union Australia, 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.

*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.

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Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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