One of Australia's largest non-bank lenders, loans.com.au, has launched what could be Australia's lowest variable home loan rate.
Launched today, loans.com.au's new Smart Booster Discounted Variable Home Loan has a 1.99% p.a. introductory variable rate (2.55% p.a. comparison rate*).
The 1.99% p.a. interest rate applies for one year before reverting to a rate of 2.57% p.a.
Available to homebuyers and refinancers with at least a 20% deposit or equity, the new mortgage is considered to be Australia's first variable rate home loan with an interest rate under 2%, albeit an introductory one.
It's an offer which throws down the gauntlet to other lenders in Australia amid an increasingly competitive home loan market.
Check out how the new home loan compares to some of the other competitive variable rates on the market:
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, 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.
Loans.com.au Managing Director Marie Mortimer said she was excited about what the new rate could mean for Australian borrowers.
“This is the lowest variable rate we have ever offered,” Ms Mortimer said.
“This is a great opportunity for Australians to boost their equity and own their own home sooner.
“Borrowers who are considering switching to a lower rate should take the opportunity to reassess their loan provider and potentially refinance."
The online lender also launched a two year discounted variable rate of 2.09% p.a.(2.71% p.a comparison rate*).
Both products are limited to a maximum loan amount of $1,000,000 and a maximum loan-to-value ratio (LVR) of 80%.
Competition in the home loans sector is heating up in Queensland, with an online lender about to offer deals with less than 2% interest. Money experts say, home owners considering refinancing, could save thousands. https://t.co/VZ3A1cpmr5 @rosannakingsun #7NEWS pic.twitter.com/gJb0Lc3u3u— 7NEWS Brisbane (@7NewsBrisbane) July 22, 2020
Only a fortnight ago, loans.com.au made sweeping changes to its existing variable and fixed products, cutting its two-year fixed rate for owner-occupiers paying principal and interest to just 2.29% p.a. (2.98% p.a. comparison rate).
Ms Mortimer said refinancing was much easier than people realised, especially with the wealth of online lenders in Australia.
“Many people are keen to leave the big banks and are surprised to discover how easy it is to refinance and the great deals that are out there with online lenders,” she said.
“Many of our customers tell us that they delayed refinancing because they thought it would be a big hassle but it turned out to be much simpler than they expected and well worth the time invested.”
loans.com.au may be the first lender to offer a variable rate home loan under 2%, but it's not the first time a home loan has started with a 1.
But while Bank of Us' rate will be locked in for fixed term for, loans.com.au's rate will not.
Being a variable rate there is the possibility it could increase or decrease during the introductory period.
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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