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- Game on as variable rates drop to 1.99 per cent
Game on as variable rates drop to 1.99 per cent
The home loan war is heating up, with Loans.com.au offering an introductory home loan rate of just 1.99 per cent.
This is the lowest variable rate in Australia, however after the first year, the loan reverts to an ongoing variable rate of 2.57 per cent.
A two-year discounted variable rate of 2.09 per cent is also available with Loans.com.au, reverting to 2.79 per cent ongoing.
The rates are available to new customers who apply for an owner-occupier loan paying principal and interest repayments with a deposit of 20 per cent or more
Loans.com.au Smart Booster Home Loan
| Loan type | Discounted rate | Ongoing variable rate | Comparison rate |
| 1-year variable with discount | 1.99% | 2.57% | 2.55% |
| 2-year variable with discount | 2.09% | 2.79% | 2.71% |
RateCity.com.au analysis shows if an owner-occupier with a $400,000 home loan switched from the average existing owner-occupier rate of 3.28 per cent, to the 1 year introductory rate from Loans.com.au they could potentially save $4,246 in the first year, including refinancing costs, or over $15,000 in the first five years.
Sally Tindall, research director at RateCity.com.au, said today's announcement from Loans.com.au comes hot on the heels of Bank of Us, which was the first lender to offer a fixed rate of 1.99 per cent to Tasmanian customers last month.
“At 1.99 per cent, this is Australia’s lowest variable rate, but it’s important to remember that it only lasts for a year,” she said.
“After 12 months, the loan reverts to an ongoing variable rate of 2.57 per cent, which is still competitive. It’s in the top 5 per cent of comparable rates in our database. It’s also lower than the ongoing variable rates on offer from the big four banks.
“It’s great to see the low-cost lenders upping the ante in the home loan rate war.
“With refinancing on the rise, we’re increasingly seeing ‘out of the box’ offers from lenders looking to attract new customers.
“Whether it’s a cashback special, an introductory rate or an offer to waive lenders mortgage insurance, do the maths to make sure you end up ahead.
“It’s also important to work out how regularly you’re likely to refinance. An introductory deal could work for someone who switches regularly, but if you’re looking to set and forget, you might save more money opting for a loan with a lower ongoing rate,” she said.
Who comes out on top? Cost of a $400,000 loan over the first 5 years
| Cost - 1 year | Cost - 2 years | Cost - 5 years | |
| Loans.com.au Intro 1yr rate: 1.99% | $8,717 | $18,537 | $46,121 |
| Loans.com.au Intro 2yr rate: 2.09% | $9,112 | $17,095 | $47,032 |
| Freedom Lend ongoing variable rate: 2.17% | $8,909 | $17,201 | $40,417 |
| Big four bank (average) lowest variable rate: 2.72% | $11,177 | $21,605 | $50,928 |
Notes: The calculations in this release include interest charges and fees. Calculations are based on a loan size of $400,000 with 25 years remaining, paying principal and interest as an owner occupier. Assumes variable rates remain unchanged. Fees include the discharge fees from old lender and upfront fees from new lender but does not include government switching fees. None of the products listed have ongoing fees.
Lowest ongoing variable rates on RateCity.com.au
| Variable | Advertised rate |
| Freedom Lend | 2.17% |
| Reduce Home Loans | 2.19% |
| Homestar Finance | 2.29% |
Notes: Data accurate as of 22.07.2020.
Disclaimer
This article is over two years old, last updated on July 22, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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Product database updated 24 Dec, 2024
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