Want a competitive home loan? You might have to fix in this environment

author-avatar By
on December 11, 2020
Want a competitive home loan? You might have to fix in this environment

Freedom Lend, Illawarra Credit Union, AMP and others managed to cut rates in the past week, but mainly for borrowers willing to fix on packaged loans.

Freedom Lend made quite a few changes, including cuts by up to 50 basis points for its fixed loans

For example, the 'Freedom Fixed' loan paying principal & interest (P&I) fixed for three years is now 2.24% p.a. (2.44% p.a. comparison rate*).

This is for borrowers with 80% LVR, i.e. 20% deposits. A 95% LVR loan is also available.

In contrast, Freedom Lend cut a couple of variable loans only by between 5 and 10 basis points.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate* Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME 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%
LIMITED TIME 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%
VariableMore details
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
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
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 21, 2022. View disclaimer.

Illawarra Credit Union also cut a wide variety of home loans, most notably its fixed 'The Works' packaged loans.

The Works packaged loan fixed for one year paying P&I was cut by 45 basis points down to 2.34% p.a. (3.00% p.a. comparison rate*).

AMP was another to cut rates on packaged loans in the past week.

For example, the 'Professional Package' series was cut by up to 30 basis points for investors.

Paying P&I, the two year fixed package rate is now 2.49% p.a. (3.76% p.a. comparison rate*).

That said, AMP did introduce some Professional Package variable loans for owner-occupiers, aimed at refinancers with the equivalent of 40% deposits (60% LVR).

Where to find competitive variable rates

You could look at the table above to see some of the more competitive variable offers in the market at the moment.

Upwards of 35 lenders have home loans below the 2.00% p.a. advertised rate threshold these days, yet only a handful are for variable home loans.

The big four, for example, introduced sub-2% home loans only for packaged loans, fixed for four years, and generally speaking, lenders laid a massive stinker for borrowers following the Reserve Bank's latest cash rate cut.

In the past week, Reliance Bank and Credit Union SA did manage to either introduce or cut some variable loans, but only by up to 10 basis points.

For example, Reliance Bank cut its 'All in One' variable home loan for owner-occupiers paying P&I, though it's a two-year intro rate offered as a 'discount'.

It was cut by just 5 basis points down to 2.85% p.a. (4.19% p.a. comparison rate*).

Meanwhile, Credit Union SA introduced a couple new variable loans.

One is a variable packaged loan for first home buyers, which features an interest rate of 2.99% p.a. (3.41% p.a. comparison rate*).

As always, check the lenders' websites to learn about the conditions and 'discount offer' periods of each 'special offer' home loan.

Thus far, in the 'rate war', many lenders have been most willing to introduce their most competitive loans in the fixed, packaged loan space.

While fixed home loans can provide repayment certainty, which could be crucial during a recession, they have their downsides as well.

Most notably, rates are already feasibly at their lowest for the next few years, and breaking out of a fixed loan early could cost thousands.

They can also be more restrictive in how many early repayments you can make and so on.

Meanwhile, packaged loans bundle up credit cards and other products you might not need for extra fees, which is often reflected in the comparison rate.


Photo by Sincerely Media 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.

Latest Articles

author-avatar
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 is passionate about breaking down complex financial topics for the everyday consumer.

Collections:

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy