February home loan snapshot: UBank drops new leading fixed rate amid more cuts

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It may be a new year, and the three Reserve Bank interest rate cuts of 2020 may be slowly disappearing in the rearview mirror, but the home loan rate cut trend hasn’t let up in 2021.

According to the latest edition of the Mozo Banking Roundup a number of lenders have already reduced their rates this year, pushing the average fixed and variable rates in our database to fresh lows.

So which lenders have been busy cutting rates? What does an average rate look like? And which lenders are offering the lowest fixed and variable rates in February? Let’s get into it.

UBank grabs pole position with new 3-year fixed rate

If you missed the memo, lenders really went hard on dropping fixed home loan rates during 2020. In fact, fixed rate offers appear to have taken over from variable offers as the loan type lenders are competing the most aggressively on.

Since December the average fixed rates on 1-5 year terms in the Mozo database have all dropped, with the average 2-year fixed rate now sitting at just 2.34%. A number of cuts from lenders in recent few weeks have helped drive these averages down of which highlights include:

  • NAB subsidiary UBank trimmed between 15 and 35 basis points off select fixed rate loans. The 3-year fixed rate for owner occupiers on its UHomeLoan (Fixed) is now the lowest in our database at 1.75% (2.22% comparison rate*). 
  • Newcastle Permanent cut 19 basis points off the 4-year fixed rate on its packaged Special Fixed Rate Home Loan to 1.99% (3.46% comparison rate*). Although it also increased the rate on its 5-year term by 20 basis points.
  • P&N Bank cut fixed rates by between 5 and 20 basis points, meaning the 4-year fixed rate on its Fixed Rate Home Loan offer is now 1.99% (3.27% comparison rate*).

To put these latest changes into perspective here’s a snapshot of the lowest fixed rate^ offers in our database, plus the Mozo fixed rate averages, as of February 1, 2021:

TermRate leaderFixed rateAverage
1-yearTic:Toc1.89% (2.18% comparison rate*)2.36%
2-yearTic:Toc1.89% (2.15% comparison rate*)2.34%
3-yearUBank1.75% (2.22% comparison rate*)2.37%
4-yearBank of Melbourne and St.George1.94% (3.21% comparison rate*)2.40%
5-yearAussie1.99% (2.35% comparison rate*)2.65%

Variable rate cuts flow in at slower pace

Compared to fixed rates, the action on the variable rate front has been more subdued of late. That’s not to say that there’s been zero movement though, because a number of lenders have reduced their variable rates in recent weeks. Some of the changes of note include:

  • HSBC took 15 basis points off its Home Value Loan which means the lowest rate available to owner occupiers is currently 2.44% (2.45% comparison rate*) - one of the lowest on offer from a bank in our database.
  • Online lender Freedomlend further cemented itself among the players with the very lowest variable rates in our database by cutting its Variable Home Loan offer by 2 basis points to 2.17% (2.17% comparison rate*).
  • MOVE Bank trimmed its Straightforward Home Loan offer for owner occupiers by 15 basis points to 2.39% (2.43% comparison rate*).

As a result of the recent reductions the average variable rate in the Mozo database has dropped slightly to 3.30%, though the most competitive rates on offer remain well below that figure. To put that rate into perspective, here’s a snapshot of the five lowest variable rates^ in the Mozo database as of February 1, 2021:

Variable rateLenderLoan
1.99% (2.05% comparison rate*)Reduce Home LoansSuper Saver Variable
2.09% (2.09% comparison rate*)Pacific Mortgage GroupStandard Variable
2.14% (2.19% comparison rate*)HomestarStar Essentials
2.17% (2.17% comparison rate*)FreedomLendVariable Home Loan
2.17% (2.20% comparison rate*)Well Home LoansWell Balanced

And while the official cash rate is highly unlikely to be reduced further at the first Reserve Bank monthly meeting of 2021 later today, lenders may continue to cut variable and fixed home loan rates throughout February as competition remains fierce.

RELATED: Fixed home loan rates are at all-time lows, is now the time to lock in a rate?

To keep up with the latest rates and news, head on over to our home loan comparison hub. Or if you’re thinking about taking out a new loan or making the switch from your current lender, why not start by comparing some of the competitive offers in the table below.

^Based on an owner occupier making principal and interest repayments on a $400,000 loan with an 80% LVR. For more information on average home loan rates, check out our Australian home loan statistics.

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  • placeholder
    Mozo Experts Choice 2021
    Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.variable for 24 months and then 2.25% p.a. variable
    2.21% p.a.
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  • placeholder
    Mozo Experts Choice 2021
    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.
    fixed 3 years
    2.24% p.a.
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    Details
  • Hot DealFor a chance to win $100K towards your home loan, apply with Athena before Oct 31 & approved by Dec 15 (Please read the full T&C's)
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    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.
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    Details
  • placeholder
    Variable Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.
    Go to site
    Details
  • placeholder
    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.32% p.a.
    Go to site
    Details

* 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, loan amount and term entered. 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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