An 'environmentally friendly' home loan under 2%

author-avatar By on November 27, 2020
An 'environmentally friendly' home loan under 2%

Bank Australia, a bank that claims to be environmentally sustainable, this week introduced two home loans under the 2% advertised rate threshold.

Like a lot of other lenders with home loans under 2%, borrowers must be willing to package and fix their loans for two to three years.

  • Premium Package Fixed 2 Years: 20 basis point cut to 1.99% p.a. (3.23% p.a. comparison rate*)
  • Premium Package Fixed 3 Years: 20 basis point cut to 1.99% p.a. (3.15% p.a. comparison rate*)

With these loans, borrowers must have a minimum 30% deposit, i.e. 70% LVR, and pay principal & interest (P&I).

In Savings.com.au's market research, there are now at least 35 lenders with advertised rates less than 2% - below are how a few compare.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of October 16, 2021. View disclaimer.

Bank Australia says its 'money is clean' because it's never loaned to fossil fuel industries or to live animal exporters.

All loans are subject to its 'Responsible Banking Policy', with Bank Australia having a penchant for individual borrowers, community renewable energy, and community and disability housing. 

See also: Concerned about climate change? Consider switching your super

Bank Australia was contacted for comment in regards to how much it had drawn down from the Reserve Bank's Term Funding Facility (TFF).

Under the TFF, banks can draw down low-cost funding at a rate of 0.10% p.a. over a period of three years (previously 0.25%), which partly explains why so many lenders offer competitive home loans under 2% on fixed terms of two to three years. 

Bank Australia also has a securitised 'warehouse facility' through ANZ, which provides funding through means other than deposits.

ANZ has previously loaned to fossil fuel industries but has vowed to end funding to thermal coal by 2030.

Other notable rate movements

On Monday, MOVE Bank also cut below the 2% barrier, on its 'Complete Package', fixed for one year.

It was cut by 20 basis points to 1.99% p.a. (3.11% p.a. comparison rate*).

Borrowers can have as little as a 5% deposit - i.e. a 95% LVR - but must pay P&I repayments. 

Conversely, MOVE also raised the interest rate on its equivalent three-year fixed loan by 30 basis points. 

Bank of Us also cut a few home loan rates.

Most notably its 'FlexiDiscount' home loan fixed for two years was cut by 20 basis points to 2.29% p.a. (2.73% p.a. comparison rate*).

On that particular loan, borrowers must have a minimum 20% deposit, though Bank of Us also offers home loans to borrowers with smaller deposits. 

Previously, these loans were among the first to be cut below the 2% threshold - albeit for Tasmanian residents only - yet they were offered for a limited time, raised, and then cut again.


Photo by Dan Meyers on Unsplash

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): Great Southern Bank, 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.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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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author-avatar
Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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