UBank introduces 'lowest ever' home loan rate

author-avatar By
on January 22, 2021
UBank introduces 'lowest ever' home loan rate

NAB-owned digital bank UBank has introduced what could be Australia's lowest advertised home loan interest rate.

For a limited time, UBank is offering a three-year fixed home loan rate of 1.75% p.a., with a comparison rate of 2.22% p.a.* for owner occupiers paying principal & interest.

Interested borrowers must apply by 26 February and settle within 90 days.

The maximum loan-to-value ratio (LVR) on the loan is 80% (i.e. a 20% deposit), which is distinct among lenders with home loans under 2% - many of the lowest rates have a maximum LVR of 60-70%. 

The new 'UHomeLoan' advertised rate represents a 20 basis point cut to the three-year fixed rate, with the home loan previously charging 1.95% p.a.

The NAB-owned lender now holds claim to what could be the lowest advertised rate home loan on the market, according to Savings.com.au's market research.

You can see how this rate stacks up to those offered by other lenders below, noting that the latest cut may be yet to appear.

The table below features home loans with some of the lowest interest rates on the market.

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

  • 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.

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 29, 2022. View disclaimer.

According to UBank CEO Philippa Watson, the online lender has more than halved its interest rate on its three-year owner occupier loan in a little over 18 months.

“Rates are at an all-time low. If you’ve been toying with the idea of fixing all or some of your home loan, then I encourage you to explore the most competitive rates, as you could be saving thousands," she said.

In May 2019, the advertised rate for that loan was 3.59% p.a, which UBank says has the potential to save customers up to $465 per month in interest payments on a $480,000 loan.

UBank's rate change comes amid a pick-up in activity over the past week as some lenders locked-in their first rate cuts of the year.

For example, People's Choice cut its three-year fixed packaged loan for owner occupiers by 10 basis points.

It now stands at 1.99% p.a. (3.64% p.a. comparison rate*), for those paying P&I.

Various other non-packaged investor and owner occupier loans were cut by up to 15 basis points.

Elsewhere, Newcastle Permanent cut and raised a few home loans. 

Various 'Premium Plus Package' home loans fixed for five years were raised by up to 20 basis points.

However, some four-year fixed loans were cut by up to 19 basis points.

For example, the four year fixed loan for investors now stands at 2.59% p.a. (3.96% p.a. comparison rate*).

This is a 'special offer' for borrowers with a maximum LVR of 80%.

Newcastle Permanent is notable in that borrowers can fix their home loan for up to 10 years. 


Photo by Lennon Cheng 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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