Construction home loan rates cut on back of HomeBuilder grant

Both Qudos Bank and Freedom Lend made adjustments to construction home loan rates in the past week in a possible bid to attract HomeBuilder grant recipients. 

The $25,000 HomeBuilder grant is available for people building a home up to the value of $750,000 including land value.

Qudos Bank's cuts were:

• Construction Home Loan 80%: 50 basis point cut to 2.89% p.a. (2.93% p.a. comparison rate*)
• Construction Home Loan 90%: 50 basis point cut to 2.99% p.a. (3.03% p.a. comparison rate*)

Qudos Bank also made cuts to its investment construction loans, but investment properties are not eligible for HomeBuilder.

Meanwhile, Freedom Lend made a smaller cut by 3 basis points to its construction loan, down to 2.68% p.a. (2.70% p.a. comparison rate*)

This rate is applicable for both 80% and 90% LVR borrowers, which is unusual given lenders usually charge a higher rate if borrowers have a smaller deposit.

Compared to others in the construction loan market, this is how these two lenders stack up:

The 2% barrier got breached again

Earlier in the week, challenger brand loans.com.au introduced a home loan with a variable interest rate below the 2.00% p.a. barrier, down to 1.99% p.a. (2.55% p.a. comparison rate*).

The sub-2% rate is available for the first year, before the rate then reverts to 2.57% p.a.

The online lender also launched a two year discounted variable rate of 2.09% p.a.(2.71% p.a comparison rate*) which reverts to 2.79% p.a. after two years.

Both products are limited to borrowers with a maximum LVR of 80%, with a maximum loan amount of $1 million. 

This is how loans.com.au's 1.99% p.a. introductory home loan stacks up against other competitive variable-rate home loans on the market:

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Variable Basic Cashback Home Loan (Principal and Interest) (LVR < 70%)

Product Features

• Immediate cashback upon settlement
• $2000 for loans up to $700,000
• $4000 for loans over $700,000

Monthly repayments:$2,408

6.04%Advertised Rate (p.a.)

6.06%Comparison Rate*

More details

At the end of June, Bank of Us also breached the 2.00% barrier with 1.99% fixed rates across a suite of fixed-rate terms, although these are only available for Tasmanian residents.

Hobart was one of the only capital cities to record a home price growth in the June quarter, according to a Domain report, and had the second-strongest home price growth at 10% on the year, with Sydney in first.

Community First and Horizon Bank continue customer-owned cutting trend

In continuing the trend of customer-owned institutions cutting home loan rates, on Monday Community First virtually scrubbed the fixed home loan deck, making a wide variety of cuts by 20 basis points.

Some of its freshly cut rates include:

• Fixed P&I 3 Years: Down to 2.49% p.a. (3.56% p.a. comparison rate*)
• Accelerator Package Fixed P&I 3 Years: Down to 2.34% p.a. (3.80% p.a. comparison rate*)
• Investment Fixed P&I 3 Years: Down to 2.79% p.a. (3.86% p.a. comparison rate*)
• Inv Accelerator Package Fixed 3 Years: Down to 2.64% p.a. (4.09% p.a. comparison rate*)

Yesterday, Horizon Bank cut a few fixed rates for investors and owner-occupiers by 30 basis points. The new rates are:

• Fixed 1 Year: Down to 2.69% p.a. (3.45% p.a. comparison rate*)
• Fixed 2 Years: Down to 2.69% p.a. (3.38% p.a. comparison rate*)
• Inv Fixed 1 Year: Down to 2.94% p.a. (3.69% p.a. comparison rate*)
• Inv Fixed 2 Years: Down to 2.94% p.a. (3.63% p.a. comparison rate*)

CommBank has reported a spike in fixed rate lending in recent months, with around 40% of all new owner-occupier loans at fixed rates.

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