UBank is making it easier to get into the property market with smaller deposits while Athena has slashed variable mortgage rates.
From today, online lender and NAB subsidiary UBank will allow owner occupiers to buy a home with a 15% deposit without needing to fork out for Lender's Mortgage Insurance (LMI).
That's down from the standard LMI cutoff of 20%.
According to UBank, owner occupiers could save $5,000 in insurance costs on an average loan of $480,000 by saving for a $72,000 deposit (15%) instead of $96,000 (20%).
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
Smart Booster Home Loan
Product Features
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
Advertised
Rate (p.a.)
1.99%
Comparison
Rate (p.a.)
2.47%
Product Features
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
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%. 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. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
UBank CEO Philippa Watson said the major change would mean Australians can get into the market seven months earlier than if they had to pay LMI upfront.
“We’re passionate about helping Australians get into their own homes but we know saving for a home deposit takes an average of 4.6 years, rising to over eight years for Sydney-siders," Ms Watson said.
“By only requiring a 15% deposit and waiving the need for LMI, UBank can help shave nearly seven months off the process."
Related: Gateway Bank to let customers make separate monthly LMI repayments
UBank loans available with this offer include a variable rate of 2.49% p.a. (2.49% p.a. comparison rate*), or a three-year fixed rate of 2.05% p.a. (2.41% p.a. comparison rate*) for owner occupiers making principal and interest (P&I) repayments.
Ms Watson said LMI, which can run into the tens of thousands, is an additional expense borrowers can do without.
"We know the appetite for home ownership is continuing to grow, with 56% of Aussies who do not yet own a home excited about the prospect of owning one, up 13% since July last year," she said.
“But saving for a deposit can make the great Australian dream seem out of reach.
“LMI can add tens of thousands to a borrower’s loan. Here at UBank, we believe it’s an extra expense our customers can do without."
Athena drops variable rates by up to 20 basis points
Online lender Athena has cut interest rates on a number of its home loans for both owner occupiers and investors.
Athena rate cuts for owner occupiers
- The Celebrate variable P&I home loan for borrowers with 60% LVR has been cut by 20 basis points to 1.99% p.a. (1.99% p.a. comparison rate*).
- The Evaporate variable P&I home loan for borrowers with 60-70% LVR has been cut by 15 basis points to a new low 2.09% p.a. (2.02% p.a. comparison rate*).
- The Liberate variable P&I home loan for borrowers with 70-80% LVR has been cut by 10 basis points to 2.19% p.a. (2.08% p.a. comparison rate*).
Athena rate cuts for investors
- The Celebrate variable P&I home loan for borrowers with 60% LVR has been cut by 15 basis points to 2.39% p.a. (2.39% p.a. comparison rate*).
- The Evaporate variable P&I home loan for borrowers with 60-70% LVR has been cut by 10 basis points to 2.49% p.a. (2.43% p.a. comparison rate*).
- The Liberate variable P&I home loan for borrowers with 70-80% LVR has been cut by 5 basis points to 2.59% p.a. (2.48% p.a. comparison rate*).
- Investors making interest only (IO) repayments with 60% LVR have received a 15 basis point cut to 2.69% p.a. (2.50% p.a. comparison rate*).
Government announces new home buying measures
These changes come after the Federal Government announced a range of new measures to help Australians buy their first home sooner as part of the upcoming 2021-22 Budget, to be unveiled on Tuesday.
Among the measures are the Family Home Guarantee, which will allow 10,0000 single parents every year over four years to purchase a home with a 2% deposit from July.
The First Home Loan Deposit Scheme, now called the 'New Home Guarantee' will be expanded for a second year, providing an additional 10,000 places in 2021-22.
Under the scheme, first time buyers can purchase a newly built home or build a new home with a 5% deposit.
The maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme will be increased from $30,000 to $50,000.
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