An 'environmentally friendly' home loan under 2%

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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

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • 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%
UNLIMITED REDRAWSSPECIAL 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%
Variable
More details
ZERO APPLICATION FEESFEE FREE OFFSET
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
  • The shorter your loan, the less interest you pay in the long run.
ZERO APPLICATION FEESFEE FREE OFFSET

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

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
  • The shorter your loan, the less interest you pay in the long run.
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Variable Owner Occupied, Principal and Interest (LVR < 80%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
Variable
More details
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

Home Value Home Loan (Principal and Interest) (LVR < 70%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
Variable
More details
100% FULL OFFSET ACCOUNT
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
100% FULL OFFSET ACCOUNT

Ocean Owner Occupied (Amounts < $1m, LVR < 60%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

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 be 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. *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. Rates correct as of June 27, 2022. 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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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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 strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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