Aussies flock to online home loan lenders for better deals

Could the future of Aussie home loans be online? With the average rates for online home loans being a significant 0.22% lower than the Big Four banks, more Aussies than ever are starting to make the switch to the online home loan market. At this stage the Big Four banks have still maintained their hold on 80% of the residential loan market, with current online lender trends starting to peak, this is likely to change.

Out of more than 1 million Aussies who used to research and compare home loans in 2018, online lenders were the most popular.

Home loan selections on Mozo in 2018 Graphic

Over the year, 51% (an increase from 44%) of all home loan selections on Mozo were online home loans, with, UBank and ME being the most popular. Smaller banks such as HSBC and Bank Australia took up 23% of selections, and 11% of selections were non-bank lenders, like mutual banks and credit unions. Finally, decreasing from 21% in the year prior, a mere 15% of home loan selections were Big Four banks.

Mozo director Kirsty Lamont said that of all the home loans in the Mozo database with a rate under 4%, half of them were from online lenders.

“They are aggressively undercutting the big banks and can offer big savings to borrowers who are prepared to make the switch,” she said.

“To borrow with an online lender you’ll need to be prepared to do more of the legwork yourself, be comfortable selecting the loan without the advice of a mortgage broker and be confident about completing the application process online.”

What they lack in bank branches and tellers, online lenders make up for in value. We found that the lowest average rate for a $400,000 loan over 30 years with a Big Four bank basic mortgage offer is 3.98%, while that of an online lender was significantly lower, at 3.67%.

This means that with the lowest average Big Four bank loan you’d pay a total interest of $278,377 over the life of a 30-year loan. Alternatively, by opting for the lowest average online home loan, you could save a total of about $18,000.

If you’re considering switching over to the online home loan swing of things, check out some of our top online home loan picks below! essentials variable 80 - Essentials Variable 90
  • 2018 Mozo Experts Choice Award Winner in the Best Home Loans category
  • 3.64% p.a. (3.66% p.a. comparison rate*)
  • No ongoing fees, fee free redraw and extra repayment facilities
Find out more
The details:

Meet the Essentials Variable home loan, an online home loan all-rounder. If you’re on the prowl for a low rate, no fee online home loan with a fine assortment of features, you’ve come to the right place. This bad boy offers a competitive 3.64% p.a. interest rate (3.66% p.a. comparison rate*), as well as a free redraw facility and the flexibility to make additional loan repayments as you please. If you’re new to the world of online home loans and banking, the Essentials Variable home loan is a great place to start.

UBank Uhomeloan discount offer

UBank - UHomeLoan - Discount Offer
  • 3.59% variable interest rate for loans over $200,000 (3.59% comparison rate*)
  • Free extra repayments and redraw facility
  • No application fee or annual fees
Find out more
The details:

If you're interested in switching to an online home loan, with the current UBank UHomeLoan discount offer of 0.43% off the standard variable rate for loans below $200,000 up for grabs, there’s no better time to make the switch. And, if you still have reservations about the overall security of an online home loan, allow us to put your mind at ease. The UBank UHomeLoan is supported by NAB so you know there is a reputable face behind the computer screen. The UBank UHomeLoan Discount Offer also comes with super flexible features, like unlimited free extra repayments and a redraw facility. What’s not to love?

ME Basic home loan

ME - Flexible Home Loan
  • 3.89% p.a. (3.91% p.a. comparison rate*)
  • Free extra repayments and redraw facility
  • No application fee or annual fees
Find out more
The details:

For an online home loan account that lets you sail your own ship, check out the ME Basic Home Loan. With a competitive 3.89% interest rate (3.91% comparison rate*), no application or account fees and flexible features like free extra repayments and redraw facility, the ME Basic Home Loan gives you all the elements of a good home loan, as well as the option to choose your repayment schedule. However, it's good to know this loan comes with the guidance of a bank manager over the phone should you need the extra help.

Compare Australian Home Loans

We can show you the monthly repayment amount for a range of loans

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For more options, check out our home loan comparison table.

*Find out more about the Mozo Experts Choice Awards for Home Loans.

* 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.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. 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.

^See information about the Mozo Experts Choice Home Loan Awards

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While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.