A number of lenders have broken the 2% barrier, now offering home loans with advertised interest rates starting with a '1', but how do they stack up?
It’s finally happened. After two reductions in the Reserve Bank’s cash rate in March, now at a historic low of 0.25%, it only seemed like a matter of time until lenders starting offering home loans under the 2.00% threshold. Now, there’s quite a few lenders that offer home loans starting with a '1'.
Buying a home or looking to refinance? The table below features a selection of home loans on the market with competitive variable interest rates for owner occupiers.
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
Who offers home loans under 2%?
According to Savings.com.au’s market research, there are now at least 11 lenders offering home loans with advertised rates below 2.00% p.a.
We’ve listed these lenders below and featured a current sub-2% home loan offer from each. We will endeavour to update this page whenever a new one becomes available. Note the varying conditions between each offer as well as the different comparison rates.
Interest Rate (Comparison Rate*) per annum
Reduce Home Loans
1.89% (1.92%) p.a.
Easy Street Financial Services
1.95% (1.99%) p.a.
1.98% (2.41%) p.a.
1.99% (2.48%) p.a.
Bank of Us
1.99% (2.74%) p.a.
Illawarra Credit Union
1.99% (2.93%) p.a.
1.99% (3.10%) p.a.
Community First Credit Union
1.99% (3.25%) p.a.
1.99% (3.34%) p.a.
1.99% (3.52%) p.a.
People’s Choice Credit Union
1.99% (3.91%) p.a.
Source: Lenders' websites. Please check each individual lender's website to see further details.
So, you'll have seen all the various lenders have similar advertised rates, with varying comparison rates. But where the lenders differ is in which borrowers they offer the special rate to, and how much of a deposit is required to get it, among various other differences.
- Reduce: 1.89% p.a. (1.92% p.a. comparison rate*) variable rate for owner-occupiers on principal & interest payments with LVR of 60% or less.
- Easy Street Financial Services: 1.95% p.a. (1.99% p.a. comparison rate*) variable rate for owner occupiers borrowing at least $750,000 on principal & interest repayments with LVR of 80% or less.
- Homestar Finance: 1.98% p.a. (2.41% p.a. comparison rate*) one-year fixed rate for owner occupiers on principal & interest repayments with LVR of 80% or less.
- Loans.com.au: 1.99% p.a. (2.48% p.a. comparison rate*) one-year introductory variable rate for owner occupiers on principal & interest repayments with LVR of 80% or less.
- Bank of Us: 1.99% p.a. (2.74% p.a. comparison rate*) one-year fixed rate for owner occupiers on principal & interest repayments with LVR of 80% or less. Tasmanian residents only.
- Illawarra Credit Union: 1.99% p.a. (2.93% p.a. comparison rate) two-year variable introductory home loan, or two-year fixed home loan for owner-occupiers on principal & interest payments.
- Bank First: 1.99% p.a. (3.10% p.a. comparison rate*) three-year fixed rate package loan for owner occupiers on principal & interest repayments with LVR of 80% or less.
- Community First Credit Union: 1.99% p.a. (3.25% p.a. comparison rate*) two-year fixed rate package loan for owner occupiers on principal & interest repayments with LVR of 80% or less.
- Hume Bank: 1.99% p.a. (3.34% p.a. comparison rate*) three year fixed rate for renovations or construction of new properties i.e. 'HomeBuilder' loan, on principal & interest payments (can switch to interest-only during construction). LVR of 90% or less. Only open to builds in postcodes within 150km of Albury Post Office, Victoria.
- Greater Bank: 1.99% p.a. (3.52% p.a. comparison rate*) one year fixed rate for owner occupiers on principal & interest repayments with LVR of 80% or less.
- People’s Choice Credit Union: 1.99% p.a. (3.91% p.a. comparison rate*) one-year fixed rate package loan for first home buyer owner-occupiers on principal & interest repayments with LVR of 95% or less.
It’s worth checking with the individual lenders to confirm the exact conditions of the above offers. Also note that many of these are ‘special offers’ which may be withdrawn at any time or are only available until a set date.
Why does the comparison rate matter?
It’s all well and good to have a home loan with an advertised rate of less than 2.00% p.a. However, arguably the more important figure to look at is the comparison rate. While the advertised rate determines your base monthly repayment, it doesn’t take into account a few other things, which is where the comparison rate steps in.
The comparison rate accounts for yearly fees, monthly fees, package fees, settlement fees, exit fees and a myriad of other fees, such as for offset accounts and so on. The comparison rate, in Australia, is also based on a $150,000 loan for a 25-year term, in many circumstances. Considering in the capital cities the median dwelling value is over $500,000, this could frankly mean two fifths of bugger-all to you.
Comparison rates also take into account revert rates, which explains why many fixed-rate and introductory-rate loans tend to have a much higher comparison rate relative to the advertised rate.
Which lenders have introduced a home loan starting with a '1'?
86 400 - pending
AMP - pending
ANZ - pending
Athena - pending
Aussie Home Loans - pending
Auswide Bank - pending
Australian Military Bank - pending
Australian Unity - pending
Bank Australia - pending
Bank of Melbourne - pending
Bank of Sydney - pending
BankSA - pending
BankVic - pending
Bankwest - pending
BCU - pending
Bendigo Bank - pending
Beyond Bank - pending
BOQ - pending
Citi - pending
Commonwealth Bank - pending
Credit Union SA - pending
CUA - pending
Defence Bank - pending
Firstmac - pending
Freedom Lend - pending
G&C Mutual Bank - pending
Gateway Bank - pending
Heritage Bank - pending
Hunter United - pending
IMB Bank - pending
ING - pending
Liberty - pending
Macquarie Bank - pending
ME - pending
Mortgage - pending
Move Bank - pending
MyState Bank - pending
NAB - pending
Newcastle Permanent - pending
P&N Bank - pending
Pepper Money - pending
Police Bank - pending
Police Credit Union - pending
QBank interest rate cut - pending
Qudos Bank - pending
RACQ Bank - pending
RAMS - pending
Resimac - pending
Sydney Mutual Bank - pending
State Custodians - pending
St George - pending
Suncorp - pending
Teachers Mutual Bank - pending
The Mutual Bank - pending
Tic Toc - pending
UBank - pending
UniBank - pending
Unity Bank - pending
Virgin Money - pending
Westpac - pending
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.
- Domain launches new way to buy and sell with off-market property alerts
- What is the difference between segregated and unsegregated SMSFs?
- Many people withdrawing super early don't understand the long-term consequences
- Queensland eviction ban ends today; the only state to not extend
- Investment housing credit declines $2.3 billion in August