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

    Macquarie

    2.54% p.a.

    2.81% p.a.

    $1234

    Product details Close details
    Offset Home Loan Package

    Handy offset account to help pay your home loan off sooner. Up to 10 offset accounts per loan account available. Fee free access at ATMs. Waived credit card annual fee. $0 international purchase fees.

    • 2.54% p.a.

    • 2.81% p.a.

    • $0

    • $248.00 yearly

    • $400.00

    • yes - free

    • yes - free

    • yes

    • 70.00%

    • $0

    • $150,000

    • $5,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Monthly

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

  • Promoted

    loans.com.au

    2.48% p.a.

    2.50% p.a.

    $1234

    Product details Close details
    Smart Home Loan 80

    A low-rate home loan that could save you thousands, with no ongoing fees plus unlimited extra repayments and free redraws. Mozo Experts Choice Low Cost Home Loan 2020.^ You'll need to be borrowing $1 million or less and have at least a 20% deposit required.

    • 2.48% p.a.

    • 2.50% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • Optional - with 0.10% additional interest

    • 80.00%

    • $520

    • $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 80

  • Promoted

    HSBC

    2.59% p.a.

    2.60% p.a.

    $1234

    Product details Close details
    Home Value Loan

    No ongoing fees. Free extra repayments and online redraw. Mozo Experts Choice Split Home Loan 2020^

    • 2.59% p.a.

    • 2.60% p.a.

    • $150

    • $0.00

    • $300.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $150

    • $50,000

    • $7,500,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

  • Promoted

    Athena

    2.34% p.a.

    2.34% p.a.

    $1234

    Product details Close details
    Celebrate Variable Home Loan

    Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^

    • 2.34% p.a.

    • 2.34% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 60.00%

    • $0

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

  • Promoted

    Homestar

    2.29% p.a.

    2.32% p.a.

    $1234

    Product details Close details
    Star Essentials Home Loan

    Low Cost Home Loan 2020 winner.^ A home loan packed with all the essentials and offering up to $1500 cashback and no ongoing fees. No Construction loans.

    • 2.29% p.a.

    • 2.32% p.a.

    • $515

    • $0.00

    • $535.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $515

    • $150,000

    • $850,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Refinances receive up to $1,500 cashback or upfront fees waived on purchases for applications received by 31 October 2020 and settled by 31 January 2021.

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

*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 the amount and term you entered.

**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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