Neobank only lender to cut home loan rates in a quiet week

author-avatar By on October 16, 2020
Neobank only lender to cut home loan rates in a quiet week

Source: 86 400 Twitter

86 400 was the only lender in Savings.com.au's market research to cut home loan interest rates this week as speculation of an RBA rate cut grew.

The neobank cut a variety of fixed and variable home loans for investors, across both interest-only (IO), and principal & interest (P&I) repayment methods.

Interest rates were cut by between 5 and 25 basis points, but 86 400's lending product lead Melissa Christy says this isn't necessarily in anticipation of a potential Reserve Bank cut next month.

"We’ll continue to review our rates based on a range of factors," she said.

Buying an investment property or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for investors.

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) investment 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. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Some of 86 400's home loans to get a cut were:

  • Investment Own Fixed P&I 1 Year: 20 basis point cut to 2.49% p.a. (2.95% p.a. comparison rate*)
  • Investment Own Fixed IO 1 Year: 20 basis point cut to 2.69% p.a. (2.96% p.a. comparison rate*)
  • Investment Own Variable P&I 60%: 20 basis point cut to  2.69% p.a. (2.97% p.a. comparison rate*)
  • Investment Own Variable IO 70-80%: 25 basis point cut to 3.19% p.a. (3.25% p.a. comparison rate*)

Ms Christy said for an investor facing deferred rent and a tougher rental market, switching to interest-only could be preferable to deferring their mortgage entirely.

"That would enable customers to still meet the interest component of their loan each month, and avoid interest being capitalised as this increases the overall amount owed over the term of the loan," she said.

Deferring a mortgage could leave a borrower thousands of dollars worse off in the long term due to interest capitalisation. 

86 400's cuts come mere days after the neobank also cut its savings account interest rate again.

It's now down to 1.35% p.a., representing a 25 basis point cut.

In an email to customers, 86 400 cited the "economic environment" as its reason for the savings account cut.

Below are now some of the highest interest rates on savings accounts in the market, across both introductory and ongoing accounts.


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 2019. 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.

*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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author-avatar
Harrison joined Savings in 2020. He is a journalist with more than four years of experience, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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