UBank slashes fixed interest rates, while Bank of Us has a new low offer

author-avatar By on September 03, 2021
UBank slashes fixed interest rates, while Bank of Us has a new low offer

NAB-owned digital lender UBank has cut interest rates on two fixed-rate home loans only two weeks after slashing rates on some variable-rate home loans.

On Friday a couple of UBank rate changes took effect, including:

  • UHomeLoan Fixed P&I 3 Years: Cut by 10 basis points to 1.85% p.a. (2.24% p.a. comparison rate*)
  • UHomeLoan Fixed P&I 3 Years 85%: Cut by 10 basis points to 2.05% p.a. (2.40% p.a. comparison rate*)

This follows UBank's cuts to variable investor rates in late August.

UBank's feature on its 85% loan-to-value ratio (LVR) home loan is that borrowers do not have to pay lenders mortgage insurance (LMI).

"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," UBank CEO Philippa Watson told Savings.com.au.

Depending on the size of the home loan, paying a slightly higher interest rate could work out to be cheaper than paying insurance, which is typically anywhere from 1-4% of the purchase price depending on insurance provider.

Buyers could also factor in capital gains and time taken to save for a deposit, given property prices have increased by more than 15% in the year to date. 

Domain's 2021 First Home Buyers report shows an increase in the time taken for first home buyers to save for a 20% deposit compared to a year ago.

In Sydney for example, it now takes first home buyers six months longer to save for a 'starter home' compared to a year ago, now sitting at seven years and one month.

Bank of Us introduces new low offer for Tasmanian residents

Tasmanian-based Bank of Us has introduced a new 'Special Offer' discounted rate on its 'FlexiDiscount' home loan, fixed for one year with 80% LVR.

The rate is 1.79% p.a. (2.45% p.a. comparison rates*), and is offered to Tasmanian residents only.

This represents one of the lowest home loan rates ever, with Bank of Us having form as a market leader.  

In June 2020, Bank of Us became the first in Savings.com.au's market research to offer a home loan rate under 2%.


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.


Photo by Josh Spires 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 which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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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.

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