Rate War: Another lender introduces a home loan under 2%

author-avatar By on July 31, 2020
Rate War: Another lender introduces a home loan under 2%

Photo by Greg Rakozy on Unsplash

Last night, HomeStar Finance introduced an owner-occupier home loan fixed for one year at 1.98% p.a. (2.51% p.a. comparison rate*)

Called the 'Star Classic' home loan, the online lender joins two others in recent weeks to breach the 2% barrier, though HomeStar can lay claim to the lowest advertised rate by one basis point.

After the one year fixed term ends, the rate reverts to an ongoing variable rate of 2.49% p.a.

The rate is also a 'special offer', and borrowers will have to have their application submitted by 30 September, and approved by 31 December.

Borrowers must be owner occupiers and have a minimum 20% deposit, and there is also an application fee of $495.

Maximum loan size is $850,000 and borrowers are restricted to metro locations.

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.

Provider
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayment
 
2.59% 2.55% $1,599 Go to site
2.89% 2.89% $1,663 Go to site
Budget Home Loan OO P&I
2.68% 2.74% $1,618 Go to site

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. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 03 August 2020. View disclaimer.

HSBC, Hume Bank, RACQ bank also cut

In what was a fairly subdued week for rate cuts, a few key lenders did manage to cut for new borrowers.

HSBC

HSBC made a wide variety of cuts to its fixed investment home loans, by up to 41 basis points. Some key cuts were:

  • Investment Fixed P&I 2 Years 80%: 36 basis point cut to 2.39% p.a. (3.29% p.a. comparison rate*)
  • Investment Fixed P&I 5 Years 80%: 41 basis point cut to 2.79% p.a. (3.21% p.a. comparison rate*)

Hume Bank

In the past week, Hume Bank also focused on cuts to fixed home loans, however these were primarily to owner-occupier home loans. A couple of key cuts were:

  • 2 Year Fixed Intro 70%: 10 basis point cut to 2.19% p.a. (4.04% p.a. comparison rate*)
  • Residential Fixed P&I 3 Years: 10 basis point cut to 2.39% p.a. (3.92% p.a. comparison rate*)

RACQ Bank

This morning RACQ Bank cut some home loan rates as 'special offers'. A couple were:

  • Mortgage Saver: 12 basis point cut to 2.75% p.a. (2.77% p.a. comparison rate*)
  • Mortgage Breaker: 12 basis point cut to 2.95% p.a. (3.01% p.a. comparison rate*)

These are variable rates for new lending only. The main difference between the two is that the 'Breaker' has a 100% offset account and a $600 establishment fee.

Meanwhile, RACQ Bank also raised a couple of home loans' interest rates by 15 basis points, including:

  • Investment Fixed 5 Years: Up to 2.94% p.a. (4.10% p.a. comparison rate*)
  • Residential Fixed 5 Years: Up to 2.74% p.a. (3.75% p.a. comparison rate*)

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 2019) 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 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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