Borrowers are being urged to beware of the banks' fixed rate home loan offers after analysis by Mozo.com.au found that some banks are luring in borrowers with ultra low fixed rates that revert to extremely uncompetitive variable rates once the fixed loan term ends.
Mozo found that revert rates on fixed home loans can be as high as 5.10% on 2 year fixed loans for owner occupiers paying principal & interest.
“Lenders know that most people won't bother to refinance when their fixed term ends, and they stand to make a tidy sum in profit over the life of the loan if the customer is stuck paying an uncompetitive revert rate", said Mozo Director Kirsty Lamont.
"If you're looking to fix your home loan to take advantage of record low rates, be sure to check both the fixed rate and the comparison rate which takes into account the ongoing interest and fees paid over the life of the loan to give you a better measure of the true cost of the loan."
Mozo found that the average revert rate is 3.49%, with a number of competitive fixed rate deals sitting well below this...
TOP FIXED HOME LOANS DECEMBER 2020
New 1.95% fixed rate for 3 years (2.36% comparison rate*)
With the security of an ultra-low rate locked in for 3 years, a competitive revert rate well below 3.00% and the flexibility to make free additional repayments up to $20,000 a year, this little gem could be a great choice for borrowers who want the peace of mind of fixed repayments plus the freedom to pay the loan off faster. UBank is backed by NAB and has home loan experts on tap to help you through the online application process.
loans.com.au Special Offer Fixed Rate Home Loan
1.99% fixed rate for 3 years (2.70% comparison rate*)
Loans.com.au has just dropped this ultra low 3 year fixed rate home loan for borrowers looking to lock in while rates are at record lows without paying the price later on, as the low 2.70% comparison rate* means your loan will still be extremely competitive when the fixed period ends. You can make up to $10,000 a year in extra repayments over the fixed term without penalty, but bear in mind that there is no redraw facility.
Suncorp Fixed Home Loan Special Offer
1.89% fixed rate for 2 years (2.94% comparison rate*)
This killer new 2 year fixed home loan offer from Suncorp also has a comparison rate* coming in under 3.00%, so you won't be stuck with a rip off revert rate when the fixed term ends. You can make up to $500 a month in extra repayments over the fixed term without penalty, but bear in mind that there is no redraw facility. As an added incentive, for a limited time refinancers can get a cash bonus of $2,000 when refinancing an eligible home loan.
Virgin Money Special Offer Reward Me Fixed Rate Home Loan
2.04% fixed rate for 3 years (2.73% comparison rate*)
Free additional repayments up to $10,000 p.a.
$3,000 cashback offer
Super low 3 year fixed rate? Tick. Low ongoing comparison rate under 3.00% p.a.? Double tick. This competitive fixed rate home loan from Virgin Money guarantees peace of mind over your mortgage repayments plus extra benefits like the freedom to make up to $10,000 a year in extra repayments and earn thousands of Velocity Points over the life of the loan, not to mention the $3,000 cashback offer for refinancers.
1.99% fixed rate for 4 years (2.90% comparison rate*)
Bonus $3,000 cashback for refinancers
Free extra repayments up to $5,000 p.a.
Featuring an attractive low fixed rate for a 4 year term and a comparison rate* below 2.90%, Bank of Queensland's Fixed Rate Home Loan could be a great option for homebuyers wanting repayment stability. Borrowers have the freedom to make free extra repayments up to $5,000 a year to get ahead on their mortgage and for a limited time refinancers will score a bonus $3,000 when they apply by December 19.
*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.