ME Bank, Loans.com.au, UBank and others cut fixed home loan rates

William Jolly By on June 18, 2019
 
Which lenders have made post-rate cut changes to fixed home loans?

Photo by Jason Briscoe on Unsplash

In addition to the many variable home loan rate cuts seen in the wake of the Reserve Bank’s decision to lower the cash rate, a number of lenders have also made big rate reductions to fixed home loan rates.

As it stands, some of the lowest fixed rates on the market are in fact lower than the lowest variable rates, or at least as low.

Today alone, major online lenders loans.com.au and ME announced new fixed home loan rates for owner-occupier borrowers making principal and interest repayments.

Loans.com.au is now offering a rate of 3.19% (3.67% comparison rate*) on its two and three year fixed rate special home loans after reducing rates by 29 basis points.

Below are tables which show (at the time of writing) how these new loans.com.au home loan interest rates compare with some of the sharpest two and three-year fixed rates on offer from the big four and the top 10 customer-owned institutions (e.g. not-for-profits, credit unions etc.).

Two-year fixed rates

Company Advertised rate Comp rate* Monthly repayments  
2yrs Fixed Special 3.19% 3.67% $1,728 More details
Great Rate Discount Fixed 2yrs $150k+ 3.39% 4.35% $1,772 More details
Tailored Fixed P&I 2yrs 3.69% 4.98% $1,839 More details
Advertised rate Comp rate* Monthly repayments
2yrs Fixed Special
3.19% 3.67% $1,728
More details
Great Rate Discount Fixed 2yrs $150k+
3.39% 4.35% $1,772
More details
Tailored Fixed P&I 2yrs
3.69% 4.98% $1,839
More details

*Data accurate as at 18 June 2019. See disclaimer. This table shows (at the time of writing) 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 loans.com.au for their fixed, P&I, owner-occupier, non-honeymoon home loans with a loan amount of $400,000 for two years.

Three-year fixed rates

Company Advertised rate Comp rate* Monthly repayments  
3yrs Fixed Special 3.19% 3.63% $1,728 More details
3yrs Fixed Owner Occupier P&I 3.49% 4.65% $1,794 More details
Residential Fixed 3yrs 3.84% 4.75% $1,873 More details
Advertised rate Comp rate* Monthly repayments
3yrs Fixed Special
3.19% 3.63% $1,728
More details
3yrs Fixed Owner Occupier P&I
3.49% 4.65% $1,794
More details
Residential Fixed 3yrs
3.84% 4.75% $1,873
More details

*Data accurate as at 18 June 2019. See disclaimer. This table shows (at the time of writing) 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 loans.com.au for their fixed, P&I, owner-occupier, LVR80, non-honeymoon home loans with a loan amount of $400,000 for three years.

ME has cut interest rates on a variety of products by up to 31 basis points, including its Flexible Fixed product and the Member’s Package Flexible Fixed product.

ME’s two-year Member Package Flexible Fixed product now has an interest rate of 3.43% (4.26% comparison rate*), while its non-packaged equivalent has a rate of 3.58% (4.85% comparison rate*).

Another prominent online lender, UBank, cut fixed rates by up to 60 basis points on various UHomeLoan products on 14 June.

Now, UBank’s one-year fixed UHomeLoan for owner-occupiers has an interest rate of 2.99% (4.09% comparison rate*) – the joint lowest advertised rate on the market.

Greater Bank’s one-year fixed Great Rate Discount loan also offers an advertised rate of 2.99% (4.19% comparison rate*).

In total, 16 different lenders have slashed fixed home loan interest rates since the cash rate change in early June.

Those that have cut fixed rates by 25 basis points or more include the likes of P&N Bank (reduced two and three-year fixed home loans for owner-occupiers by 39 basis points) and Reduce Home Loans (two-year fixed loans by 40 basis points, three year fixed loans by 50 basis points)

A 25 basis point difference in interest rates can make a huge difference to the average person’s home loan repayments.

According to the Treasurer himself, Josh Frydenberg:

“The impact of a 25 basis point cut on a $400,000 mortgage is the equivalent of saving around $60 a month or $720 a year.”

So there’s potentially a lot to be gained by refinancing to a home loan with a lower rate.

Borrowers considering a fixed home loan should, of course, bear in mind the likelihood of future cash rate cuts before making the decision to lock in a rate.

The economists at both Westpac and NAB have forecast for another two cash rate cuts to occur in 2019, which would take the cash rate down to 0.75% by the end of the year.



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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 2018. 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 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

In the interests of full disclosure, Savings.com.au 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 includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

William Jolly
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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