Loans.com.au launches one of its lowest ever home loan interest rates

author-avatar By on March 06, 2019
Loans.com.au launches one of its lowest ever home loan interest rates

Photo by Clément Falize on Unsplash

Online lender and veteran fintech loans.com.au has today announced the release of a new home loan product, which boasts an ultra-low interest rate of 3.48% (3.50% comparison rate).

Named the ‘Smart Home Loan’, the new variable-rate principal and interest mortgage has one of the lowest interest rates currently on the market for owner-occupiers.

Loans.com.au’s parent company Firstmac just hit the $11 billion mark in loans under management, and the release of the Smart Home Loan is a celebration of this milestone, according to managing director Marie Mortimer. 

“New entrants have come to market with high profile launches and promotional rates, but nobody has really managed to keep on innovating and driving competition like us,” Ms Mortimer said.

“Our difference has been that we have real people on the front line backed by smart systems that put the customer first.”

Ms Mortimer said loans.com.au shows there is a growing appreciation in the market that online lenders can still provide personal service by offering support from real people creating strong relationships. 

“A lot of online lenders are out there and they think that people should have to deal only with robots in order to qualify for a cheap rate but we have experienced Australian-based lenders who personally guide customers through the journey to settlement,” Ms Mortimer added.

“We have seen our customers call up the same lending specialist over the years to help them again when they want more money or want to buy their next property. It’s the kind of service you get when you are in private banking or with a broker, except we offer market leading rates.”

Below is a table which shows (at the time of writing) how the new Smart Home Loan interest rate compares with some of the sharpest rates on offer from the big 4, the top 10 customer-owned institutions (e.g. not-for-profits, credit unions etc.) and the larger non-banks (for their variable, P&I, owner-occupier, non-honeymoon home loans with a loan amount of $500,000): 

Provider Ad rate
p.a.
Comp rate*
p.a.
 
Smart Home Loan 3.48% 3.50% More details
Extra P&I Variable 3.69% 3.72% More details
Discount Variable 150k+ 80% 3.72% 3.72% More details
Low rate with offset P&I 80% 3.75% 3.80% More details

Rates correct as of 06 March 2019. View disclaimer.

Ms Mortimer said she had seen a trend of more customers borrowing from online lenders such as these to save thousands of dollars on their mortgage. 

“The customer gets a cheap rate because we are innovative and efficient and also because they deal with us direct,” she concluded. 

This loan won’t be available for every customer: 

  • It has a maximum loan amount of $1,000,000
  • The deposit must be at least 20% 
  • It is not available for interest-only repayments

The launch of the Smart Home Loan reflects the intensifying competition in the home loan market amid Australia’s current environment of record-low interest rates. 

Low interest rates can lead to big savings 

There are now dozens of home loan products on the market at the moment with interest rates below 4.00%, yet many people are still paying more than this.

In fact, a recent Mortgage Choice survey found two-fifths of borrowers don’t even know their home loan interest rate. 

Refinancing a mortgage to get a lower interest rate could save tens of thousands of dollars over the life of a mortgage. 

The table below shows how much one could save by refinancing a $500,000, 25-year home loan to a 3.48% interest rate from a rate of 3.98% and 4.48%.

RateMonthly repaymentsTotal repaymentExtra cost
3.48% $2,498 $749,827
3.98% $2,634 $790,100 $40,173
4.48% $2,773 $832,047 $82,220


Compared to a home loan with an interest rate of 4.48%, a 3.48% home loan could result in more than $80,000 in savings over the life of the loan, assuming there’s no difference in fees.


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.

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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William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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