Home loan rates in Australia have never in living memory been as low as they are now. In short, it's a great time to be locking in a cheap loan and maximising your borrowing power to take advantage of the low rates on offer.
If you have a home loan charging 4 per cent p.a. or more, you could save hundreds of dollars per month, and more than $50,000 over the life of the loan, by refinancing to a cheaper loan deal (see below).
The average big four bank advertised variable home loan rate, after two RBA rate cuts in June and July, is approximately 4.10 per cent p.a. according to data from InfoChoice.
But there are plenty of home loans available right now with rates set 1 full percentage point or more below this rate. Increasing numbers of lenders are announcing home loans rates under 3 per cent.
How much can refinancing save me?
Refinancing a 4.10 per cent p.a., $300,000, 25 year variable rate home loan with upfront fee of $1000 and monthly fee of $10 to a similar loan with the same fees and a rate of 2.99 per cent p.a. could save you $53,714.39 over the life of the loan according to the InfoChoice refinancing calculator. Monthly repayments would fall by $179.05 from $1600.12 to $1421.07.
Variable home loan rates under 3%
All the lowest home loan rates in Australia come from online and regional lenders. The five lowest variable home loan rates currently listed by InfoChoice are offered by Reduce Home Loans, loans.com.au and FreedomLend.
The lowest variable home loan rate listed by InfoChoice now is Reduce Home Loan's Low Rider Variable's 2.89 per cent p.a. (comparison rate also 2.89 per cent p.a.*). This loan also offers an offset account and fee-free redraw facility.
Reduce Home Loans also has its Rate Lovers variable home loan set at 2.97 per cent p.a. (comparison rate 2.97 per cent p.a.) and its Rate Slasher variable home loan rate set at 2.99 per cent p.a. (comparison rate 2.99 per cent p.a.).
Loans.com.au's Smart Home Loan is charging 3.03 per cent p.a. (comparison rate 3.05 per cent p.a.).
FreedomLend's Owner Occupied Variable P&I 80% home loan and Owner Occupied Special Variable P&I 80% home loan are now charging 3.04 per cent p.a. (comparison rate also 3.04 per cent p.a.).
Fixed home loan rates go under 3%
Newcastle based mutual lender Greater Bank's Great Rate Discount Home Loan is currently offering a one year fixed mortgage rate of 2.79 per cent p.a. (comparison rate 4.17 per cent p.a.). Greater's Ultimate Discount Home Loan Package is also set at 2.79 per cent p.a. (comparison rate 4.38 per cent p.a.) fixed for one year. Both of these loans feature fee-free redraw.
National Australia Bank's online subsidiary UBank is offering one-year fixed home loan rate of 2.99 per cent p.a. (comparison rate 3.86 per cent p.a.) with no application fee, no redraw facility and a maximum LVR of 80 per cent.
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* Comparison rate is based on a secured loan of $150,000 over the term of 25 years. WARNING: These comparison rates apply only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and costs savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.
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