Is the pendulum swinging back to variable rate home loans?
The four lenders join Westpac, Bank of Us, Teachers Mutual, Great Southern Bank and Qudos Bank in the variable-rate cutting chorus in recent weeks.
In March 2020, fixed rate loans made up just 13% of the value of new lending, while recent ABS data shows they now make up nearly half.
This was off the back of record low interest rates, and low-cost Reserve Bank funding handed to banks over a period of three years, which one lending executive said helped fuel the latest housing boom.
On Wednesday UBank made changes to its two 'UHomeLoan' variable-rate products for owner occupiers, with rates slightly different depending on the loan-to-value ratio, or LVR:
- 80% LVR: 15 basis point cut to 2.19% p.a. (2.19% p.a. comparison rate*)
- 85% LVR: 15 basis point cut to 2.34% p.a. (2.34% p.a. comparison rate*)
In August, UBank also lowered variable rates for investors by up to 19 basis points.
UBank is one of the few lenders that waives lenders mortgage insurance (LMI) for borrowers with a 15% deposit, which the NAB-owned outfit says could save borrowers $5,000 in LMI costs on the 'average' home loan of $480,000.
On Thursday, Bank Australia also cut a swathe of interest rates across its suite of 'Basic' variable-rate home loan products. Some of the more noteworthy changes include:
- Basic 60%: 20 basis point cut to 2.35% p.a. (2.39% p.a. comparison rate*)
- Basic 80%: 20 basis point cut to 2.50% p.a. (2.54% p.a. comparison rate*)
- Inv Basic 60%: 10 basis point cut to 2.65% p.a. (2.69% p.a. comparison rate*)
- Inv Basic 80%: 10 basis point cut to 2.80% p.a (2.84% p.a. comparison rate*)
Bank Australia's 80% LVR loan for owner occupiers also applies to Government-guaranteed loans for first home buyers with a 5% deposit.
On Monday, MyState Bank also decreased rates on various variable-rate home loans for investors. Some key changes include:
- Investment 60%: 10 basis point cut to 2.44% p.a. (2.50% p.a. comparison rate*)
- Investment 80%: 10 basis point cut to 2.54% p.a. (2.60% p.a. comparison rate*)
These are special offers, meaning they could be withdrawn at any time.
Meanwhile, on Friday Illawarra Credit Union cut its owner occupier variable-rate 'The Works Package' home loan by 75 basis points for new borrowers paying interest-only.
The rate is now 2.50% p.a. (3.01% p.a. comparison rate*).
'The Works Package' includes a 100% offset account, redraw facility, credit card, and the option to split the loan between fixed and variable rates.
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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 | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
