September home loan snapshot: Refinancers targeted with extensive rate discounts

By Tom Watson ·

Competition for borrowers continues to remain fierce heading into spring, with lenders cutting their sharpest variable and fixed mortgage rates by even greater margins and offering up more incentives for refinancers to switch loans.

Those are the top line takeaways from the latest edition of the Mozo Banking Roundup which has wrapped up the key changes to rates and features on a number of banking products including home loans. 

So, what is the state of home loan rates in September and which lenders have made the most significant changes of late? Read on.

Fixed rates: Virgin Money launches market leading 5-year offer

Fixed rate cuts haven’t let up in the past month, with the latest figures from the Mozo database revealing that average fixed rates have fallen across the board - the 2-year fixed average being the lowest of these at 2.52% as of September 1.

Perhaps the most noteworthy cut of late came from Virgin Money which reduced the 5-year fixed rate on its Reward Me Fixed Rate Home Loan to just 2.49% (2.87% comparison rate*) for loans over $300,000.

The new rate is now the lowest in the Mozo database for that term and a full 46 basis points below the average 5-year fixed rate.

Among other changes of note:

  • ME Bank cut 20-40 basis points off its Flexible Home Loan meaning rates are now as low as 2.19% (3.30% comparison rate*) for a 3-year fixed term with the Member Package offer
  • Bank First cut 15 to 20 basis of its Complete Fixed Home Loan which puts the 3-year fixed rate at just 2.09% (2.98% comparison rate*)

To put all of these changes into perspective and to give mortgage holders an idea of how their own rates compare, here are the five lowest rates in the Mozo database (as well as our fixed rate averages) as of September 1, 2020:

TermRate leaderFixed rateAverage
1-yearHomestar1.98% (2.51% comparison rate*)2.56%
2-yearCommunity First Credit Union1.99% (3.25% comparison rate*)2.52%
3-yearBank First1.99% (3.11% comparison rate*)2.59%
4-yearHSBC2.50% (2.95% comparison rate*)2.93%
5-yearVirgin Money2.49% (2.87% comparison rate*)2.95%

Variable rates: Athena introduces automatic rate discounting

Lenders haven’t limited their cuts to fixed rates though. In fact, there was a considerable drop in the average variable rate in the Mozo database over the past month which moved from 3.40% to 3.36%.

A number of recent cuts to headline rates seem to have helped push this change, even from lenders with offers already at the most competitive end of the market. Among the highlights:

  • AMP Bank took 14 basis points off its Variable Rate Loan (Professional Package) which now sits at 2.59% (3.00% comparison rate*) - the lowest variable package rate in our database
  • reduced the rate on its Smart Home Loan by 9 basis point to 2.48% (2.50% comparison rate*)
  • Well Home Loans cut 15 basis points off its Well Balanced offer which puts the new rate at 2.32% (2.35% comparison rate*)

Aside from rate reductions, one of the more interesting trends which has continued to pick up in the past month is the shift towards greater rate discounts for borrowers with lower loan-to-value ratios (LVRs). 

Attracting refinancers - deemed a safer group of borrowers - seems to have become a higher priority for lenders in recent months, and both 86 400 and Athena have introduced new discounted rate tiers for customers with LVRs below 80%, 70% and 60%. 

Athena’s new feature called AcceleRATES, actually automatically reduces the rate a borrower is on as they drop below certain LVR tiers. 

For example, once an owner occupier customer drops below 70% LVR they’ll automatically be shifted from a rate of 2.54% (2.46% p.a. comparison rate*) to a new rate of 2.49% (2.43% p.a. comparison rate*). 

Aside from discounted rates, a number of lenders are also trying to attract refinancers with thousands of dollars in cashback for mortgage holders looking to switch loans. 

RELATED: AcceleRates from Athena rewards borrowers as they pay down their home loan

Now that you’re up to date with the latest rates, could your own home loan rate do with a refresh? Get comparing with some of the great offers in the table below, or pay a visit to the Mozo home loan comparison hub from even more deals from over 80 different lenders.

Compare home loans - page last updated September 19, 2020

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.

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  • 2.59% p.a. variable

    2.62% p.a.

  • 2.19% p.a.
    fixed 2 years

    2.65% p.a.

  • mozo-experts-choice-2020

    2.48% p.a. variable

    2.50% p.a.

  • mozo-experts-choice-2020

    2.49% p.a. variable

    2.49% p.a.

  • mozo-experts-choice-2020

    2.39% p.a. variableApply now to get this rate from 30 Sep

    2.39% p.a.Apply now to get this rate from 30 Sep

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*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.

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