October home loan snapshot: Greater Bank drops rates to new lows, refinancing swells

The issue of housing affordability and concerns over household debt are once again dominating headlines in the property sphere, but if you’re interested in the latest from the world of home loans then you've come to the right place.

There has been a host of cuts to home loan rates in recent weeks, including a new fixed rate which is the lowest ever recorded in our database. Meanwhile, borrowers are continuing to take advantage of historically low rates, with refinancing volumes reaching new highs.

So for a snapshot of the recent home loan rate changes and a look at the lowest and average rates in the Mozo database, read on.

Recent variable and fixed rate movements

The steady stream of cuts to variable rates has continued in recent weeks, adding to a trend which has seen the average variable rate in the Mozo database (owner-occupied, <80% LVR) drop to just 3.14%. That’s the lowest it’s been since tracking began in 2015. Some of these recent variable rate changes include:

• Greater Bank cut 20bp off of its Discount Great Rate Loan, meaning the lowest rate is now 2.19% p.a. (2.21% p.a. comparison rate*) for owner occupiers with an LVR <90%

• Macquarie took 15bp off of its Basic Home Loan, putting the lowest rate available at 2.24% p.a. (2.24% p.a. comparison rate*) for owner occupiers with an LVR <80%

• Pacific Mortgage Group cut 10bp off of its Standard Variable Home Loan, meaning the lowest rate available to owner occupiers with an LVR <80% is 1.94% p.a. (1.94% p.a. comparison rate*) which is one of the lowest in our database

Moving onto fixed rates, it’s hard to look past another reduction from Greater Bank. Last month the bank reduced headline rates on a number of its fixed home loans to just 1.59%. For example, the 2-year fixed rate available on the Discount Great Rate Home Loan (<90% LVR) is now sitting at 1.59% p.a. (2.15% p.a. comparison rate*) — the lowest rate we’ve ever recorded in the Mozo database. Elsewhere:

• UBank reduced the 3-year fixed rate for owner occupiers (<80% LVR) on its UHomeLoan (Fixed) by 10bp to 1.85% p.a. (2.24% p.a. comparison rate*) which is currently the lowest in our database for that term length

• NAB increased 3, 4 and 5-year fixed rates on its Tailored Home Loan by between 10 and 30bp

Lowest home loan rates

So how do all those recent movements compare more broadly? Here’s a look at the lowest home loan rates currently being tracked in the Mozo database available to owner occupiers (P&I repayments, <80% LVR), though it’s also worth noting that many lenders offer even sharper rates to borrowers with lower loan-to-value ratios.

Lowest variable rates — Mozo database (October 1, 2021)^^

Lowest and average fixed rates — Mozo database (October 1, 2021)^^

Borrowers rush to refinance

Given just how low mortgage rates are at this point in time, it’s hardly surprising that many existing borrowers are taking the opportunity to refinance their home loans.

The latest figures released by the Australian Bureau of Statistics show that over $17 billion worth of loans were refinanced in just one month back in July, which was an ‘all-time high’.

“The value of refinancing between lenders was 60 per cent higher in July 2021 compared to a year ago. This reflected borrowers seeking out lower interest rates, particularly for fixed rate loans, and cashback deals across a large number of major and non-major lenders,” said ABS head of finance and wealth, Katherine Keenan.

As Keenan stated, low interest rates aren’t the only feature attracting mortgage holders to switch though. The number of lenders offering cashback deals to refinancers is continuing to rise, as the latest count from the Mozo database reveals that there are now 27 lenders with cashback incentives of $1,500 or more.

RELATED: More home loan lenders offering cashback deals, but are they worth it?

Time to make the most of the low interest rates on offer at the moment? Whether you’re taking out your first mortgage or you’re looking to refinance an existing loan, make our handy home loan comparison tables your first port of call.

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