Which lenders offer home loan interest rates that start with a '1'?

Photo by Wil Stewart on Unsplash

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.

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.

Lender	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.
Homestar Finance	1.98% (2.41%) p.a.
Loans.com.au	1.99% (2.48%) p.a.
Bank of Us	1.99% (2.74%) p.a.
Illawarra Credit Union	1.99% (2.93%) p.a.
Bank First	1.99% (3.10%) p.a.
Community First Credit Union	1.99% (3.25%) p.a.
Hume Bank	1.99% (3.34%) p.a.
Greater Bank	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

Bankfirst

Bank of Melbourne - pending

Bank of Sydney - pending

Bank of Us

BankSA - pending

BankVic - pending

Bankwest - pending

BCU - pending

Bendigo Bank - pending

Beyond Bank - pending

BOQ - pending

Citi - pending

Commonwealth Bank - pending

Community First CU

Credit Union SA - pending

CUA - pending

Defence Bank - pending

Easy Street Financial Services

Firstmac - pending

Freedom Lend - pending

G&C Mutual Bank - pending

Gateway Bank - pending

Greater Bank

Heritage Bank - pending

Homestar Finance

HSBC- pending

Hume Bank

Hunter United - pending

Illawarra Credit Union

IMB Bank - pending

ING - pending

Liberty - pending

Loans.com.au

Macquarie Bank - pending

ME - pending

Mortgage - pending

Move Bank - pending

MyState Bank - pending

NAB - pending

Newcastle Permanent - pending

P&N Bank - pending

People's Choice Credit Union

Pepper Money - pending

Police Bank - pending

Police Credit Union - pending

QBank interest rate cut - pending

Qudos Bank - pending

RACQ Bank - pending

RAMS - pending

Reduce Home Loans

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

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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 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.

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