UBank removes LMI for 15% deposits, Athena cuts variable rates

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on May 10, 2021
UBank removes LMI for 15% deposits, Athena cuts variable rates

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.

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
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
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
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

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

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 May 25, 2022. View disclaimer.

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.


Photo by DocuSign 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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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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