A race to the bottom - the five home loan lenders slashing rates

Ceyda Erem

08 Mar 2019

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Since the start of the year, many Aussie homeowners have felt the pinch from variable home loan rate rises, especially from the major banks. But the trend toward hiking rates could be about to change thanks to moves by challenger lenders and smaller banks. 

New kid on the block, Athena, kickstarted the trend, taking the nation by storm last week with a 3.49% variable rate (3.51% comparison rate*) and a mission to get Aussie homeowners debt-free. The online lender calls itself a ‘home loan wrecker’ and encourages borrowers to pay off their mortgage as fast as they can so they can enjoy their home.

Then yesterday, veteran online lender, loans.com.au, launched their Smart Home Loan and took the lead with a competitive variable rate of 3.48% (3.50% comparison rate*). When compared to the average variable rate in the Mozo database, the Smart Home Loan would see homeowners save $2,364 a year for a $400,000 loan over 30 years.

The lenders slashing rates 

Kogan Money has announced a 0.10% cut to the variable rate on its Essential Home Loan to 3.59% (3.60% comparison rate*) for owner occupiers. Kogan - which you might be more familiar with when it comes to cheap electronics - branched out into home loans last year, and is funded by Adelaide Bank and Pepper Group who together have over 40 years experience in financial services.

“We’ve always seen online lenders lead the pack with competitive products, and with more and more online lenders like loans.com.au and Kogan Money, shaking up the market with competitive rates, we may start seeing major banks follow in their footsteps, ” said Mozo Director, Kirsty Lamont.

In fact, NAB has now made changes to its Base Variable Home Loan special, cutting it’s rate by 20 basis points to 3.79% (3.83% comparison rate*) for owner occupiers borrowing with a 20% deposit.

“What we’re starting to notice in our database is that lenders are often choosing to cut their lowest base rate product. It really is a race to see who can entice customers with the lowest rate offering,” said Lamont.

But it’s not just innovative lenders causing a stir in the home loan market. There have also been rate reductions on the lowest rate products from three more established lenders since the start of February, two of which made decreases by 10 basis points:

Bank of Sydney, BOSBasic, 3.55% (3.62% comparison rate*)

State Custodians, Low Rate Home Loan with Offset, 3.58% (3.59% comparison rate*)

Suncorp, Back to Basics Special, 3.69% (3.70% comparison rate*)

“The big banks have been hiking rates, citing funding pressures as the main reason. It’ll be interesting to see if they respond to these new rock bottom offers from challenger lenders with better deals of their own,” said Lamont.

“And if your bank isn’t willing to match or compete with the new offers, it might be time for homeowners to make the switch.”

So if you think you could be on a better deal with your home loan, head on over to our home loan comparison tool to compare a range of offers today.

Variable rate home loan offers - rates updated daily

  • Promoted

    UBank

    3.59% p.a.

    3.59% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    Enjoy a low rate & no bank fees (on variable loans) from one of Australia's leading digital banks. Easy & fast to apply, you'll get free redraw with flexible repayments. Min. 20% deposit required. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.

    • 3.59% p.a.

    • 3.59% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes

    • no

    • 80.00%

    • $200,000

    • $699,999

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the UHomeLoan - Discount Offer

  • Promoted

    Hot Deal Brand New Offer

    loans.com.au

    3.48% p.a.

    3.50% p.a.

    $1234

    Product details Close details
    Smart Home Loan

    A low-rate home loan that could save you thousands. No application or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount.

    • 3.48% p.a.

    • 3.50% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $50,000

    • $1,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Smart Home Loan

  • Promoted

    Athena

    3.59% p.a.

    3.55% p.a.

    $1234

    Product details Close details
    Variable Home Loan

    With low rates, no fees, and automatic rate match, new-comer Athena wants you to love them and leave them. Refinance only. Minimum 20% deposit.

    • 3.59% p.a.

    • 3.55% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Variable Home Loan

  • Promoted

    Hot Deal Upfront fees waived (Apply by 28 June 2019 – T&Cs apply)

    Homestar

    3.49% p.a.

    3.49% p.a.

    $1234

    Product details Close details
    Star Essentials Home Loan

    A super low rate home loan packed with the essentials. No application or ongoing fees. Unlimited additional repayments. Free online redraws when that holiday beckons. For a limited time, refinancers can save more with up to $515 third party upfront fees waived – so get in quick! Loan size $200k to $750k, no construction loan.

    • 3.49% p.a.

    • 3.49% p.a.

    • $0

    • $0.00

    • $535.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $200,000

    • $749,999

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Star Essentials Home Loan

  • Promoted

    RACQ Bank

    3.69% p.a.

    3.69% p.a.

    $1234

    Product details Close details
    Mortgage Saver Special

    $0 Establishment fee. Plus 15% off Home & Contents Insurance for the life of the loan with Home Plus. T&Cs apply. QLD Residents only.

    • 3.69% p.a.

    • 3.69% p.a.

    • $0

    • $0.00

    • $297.00

    • yes - free

    • yes - free

    • no

    • 95.00%

    • $20,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Mortgage Saver Special

*WARNING: This comparison rate applies 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 cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

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