Mortgage lenders up the ante with low rates and money back offers
Think the home loan market has cooled down? Not a chance. In fact, it’s hotter than ever with lenders falling over themselves to compete for Australians looking to refinance or take out a new loan.
On the one hand, home loan interest rates are seriously low. According to the latest figures from the Mozo database, the average variable rate for an owner-occupier on a loan of $400,000 is now just 3.40%.
And fixed rates are just as competitive, with Mozo database averages for a $400,000 owner occupier loan currently sitting at:
- 1-year fixed rate: 2.61%
- 2-year fixed rate: 2.56%
- 3-year fixed rate: 2.63%
On the other hand, cashback deals have really come into vogue in recent months as lenders look for a point of difference to offer in their battle for borrowers.
What is a cashback deal you ask? It’s exactly what you think: a limited-time, one-off sum paid by lenders to eligible refinancers or new borrowers. Of course, you can put this straight back towards your mortgage, or use it for whatever you please.
These cashback deals are nothing to sneeze at either, because a swathe of lenders in the Mozo database are offering cashback deals between $1,000 and $4,000 at present.
So, is it possible to score a competitive rate and a cashback offer?
We’ll let you decide, but to help out we’ve wrapped up some of the hottest fixed and variable home loan offers around which have both a cashback deal and a rate well below our database average.
Fixed Home Loan Special Offer (Owner Occupier, Principal & Interest, LVR 80-90%)
- 2-year fixed rate of 2.29% (3.32% comparison rate*)
- Refinance cash bonus between $2,000-$3,000
Suncorp isn’t messing around with its Fixed Home Loan Special Offer, which includes low fixed rates across 2, 3 and 5-year terms and some sizeable cashback offers for refinancers who apply for the loan by 30 September and settle it by 29 December. The deal? Refinancers can snag a $2,000 bonus on loans of at least $250k and a $3,000 bonus on loans over $750k as long as their LVR is below 90%. Just make sure you factor in the loan’s $375 annual service fee into your budget.
Discount Fixed Rate (Owner Occupier, Principal & Interest, <80% LVR)
- 2.29% (3.52% comparison rate*) for a 2-year fixed term
- $2,500 cashback deal for eligible refinancers
With seriously low fixed rates, including a low 2.29% rate (3.52% comparison rate*) for 2-year terms, the Discount Fixed Rate loan could be an appealing option for borrowers looking to lock in. Bank of Queensland will even give eligible borrowers $2,500 cashback when they apply to refinance their loan ($250k or more and 70% LVR or less) before 15 August and settle it by 31 October. Just watch out for the $300 application fee and $10 monthly service fee attached to the loan.
Own Home Loan (Owner Occupier, Principal & Interest, LVR <80%)
A smart bank with a sharp rate and a sweet cashback offer? That’s exactly what digital bank 86 400 is offering borrowers with variable rates as low as 2.74% (3.02% comparison rate*) for owner-occupiers on its Own Home Loan. Eligible applicants borrowing at least $250,000 will also receive $2,000 cashback when they apply before 31 August and have their loan settled by 31 October. Remember that there are a few fees associated with the loan, including a $250 application fee and $250 annual service fee.
Fixed Rate Home Loan (Owner Occupier, Principal & Interest)
- 2.29% fixed rate (3.87% comparison rate*) for 3 years
- $2,000 cashback for refinancers (loans over $250k)
It may be from a major bank, but the Fixed Rate Home Loan (Wealth Package) has some seriously competitive fixed rates for borrowers, including just 2.29% (3.87% comparison rate*) for 3-year terms. And the Commonwealth Bank is even sweetening the deal for refinancers with up to $2,000 cashback on loans over $250,000 when you apply by 31 October and have the loan funded by 31 December. As always, just be sure to weigh up the rate and cashback against costs such as the $395 annual service fee.
Special Offer Fixed Rate Home Loan Special Offer (Owner Occupier, Principal & Interest)
- 2.19% fixed rate (3.43% comparison rate*) for 3-year term
- $3,000 cashback for refinancers
As special offers go, this could be up there. That’s because Credit Union SA are offering a 3-year fixed rate of just 2.19% (3.43% comparison rate*) to owner-occupiers. But it doesn’t stop there. Eligible borrowers looking to refinance or take out a new loan will be able to receive $3,000 cashback on loans over $300,000 (up to 80% LVR) as long as the loan is settled by 30 September. Bear in mind that this is a package loan, so while you’ll be able to receive discounts on other Credit Union SA products, you’ll also need to budget for the $395 annual service fee.
The Works Variable Home Loan (Owner Occupier, Principal & Interest)
We’ve saved the biggest until last, because Illawarra Credit Union’s cashback offer could be the most generous out there. Eligible borrowers who take out a new The Works Home Loan of $250,000 or more will receive $2,000 cashback as well as a bonus $2,000 if they apply for the loan via an online application before 30 November and settle it by 21 December. The loan itself comes with competitive variable rates from 2.85% (3.16% comparison rate*), though there is a $600 application fee and $250 yearly service fee to consider.
Ready to compare the deals above to some of the other hottest home loan offers on the market? With more than 500 home loans from over 80 lenders in our database, the Mozo home loan comparison table is a great place to start.
* 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.
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