The magic home loan number you need to know

Kelly Emmerton   |   14 May 2018

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We talk a lot about how important it is to find a great home loan deal, but do you really know what that means?

New research from the home loan comparison experts at Mozo reveals that 3.70% is the new benchmark for home loan rates, so if your rate is higher than this, you could be paying too much interest.

Despite the fact that half the lenders in the Mozo database currently offer an owner occupier rate at or below the magic number, many Aussies are still paying too much on their mortgage, with the average rate sitting at a steep 4.35%.

“By being on the lookout for more competitive rates under the 3.70% benchmark, borrowers have the potential to save thousands of dollars a year on their home loan,” says Mozo Director, Kirsty Lamont.

Variable rate home loan comparisons on Mozo - rates updated daily

  • Hot Deal Bonus $1,000 into a USaver account

    UHomeLoan - Discount Offer

    Owner Occupier, Principal & Interest

    3.59% p.a.

    3.59% p.a.

    Get $1,000 cash into a USaver account on a UHomeloan over $200k. (T&Cs apply).

    • 3.59% p.a.

    • 3.59% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes

    • no

    • 80.00%

    • $200,000

    • $699,999

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • Essentials Variable 80

    Owner Occupier, Principal & Interest

    3.64% p.a.

    3.66% p.a.

    A low-rate home loan that could save you thousands. No monthly or ongoing fees. Unlimited additional repayments. Unlimited free redraws with no minimum redraw amount

    • 3.64% p.a.

    • 3.66% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $50,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • Flexible Home Loan

    Owner Occupier, LVR<80%, Principal & Interest

    3.69% p.a.

    4.11% p.a.

    A flexible Home Loan with Member Package for Owner Occupiers including a low rate, redraw and offset. Annual fee $395. Experts Choice - Australia's Best Bank 2018.

    • 3.69% p.a.

    • 4.11% p.a.

    • $0

    • $395.00 yearly

    • $300.00

    • yes - free

    • yes - free

    • yes

    • 80.00%

    • $400,000

    • $699,999

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • Base Variable Rate Home Loan

    Owner Occupier, Principal & Interest

    3.69% p.a.

    3.73% p.a.

    Low ongoing rate. Free extra repayments and redraw facility. Only 5% deposit and no annual or monthly fees.

    • 3.69% p.a.

    • 3.73% p.a.

    • $600

    • $0.00

    • $350.00

    • yes - free

    • yes

    • no

    • 95.00%

    • $20,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • Discounted Variable Home Loan

    Owner Occupier, Principal & Interest

    3.64% p.a.

    4.03% p.a.

    Experts Choice - Australia's Best Customer-Owned Banking & Home Lender of the Year 2018

    • 3.64% p.a.

    • 4.03% p.a.

    • $0

    • $395.00 yearly

    • $0.00

    • yes - free

    • yes - free

    • yes

    • 90.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • Basic Home Loan Special

    LVR<80%, Owner Occupier

    3.65% p.a.

    3.66% p.a.

    A Basic Home Loan which offers a competitive interest rate and other features to make your home or investment loan more affordable. No establishment fee until 30/09/2018. Option to fix full loan or split between fixed and variable. Redraw available.

    • 3.65% p.a.

    • 3.66% p.a.

    • $0

    • $0.00

    • $250.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $10,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • Low Rate Essentials Home Loan

    LVR<85%, Owner Occupier

    3.67% p.a.

    3.69% p.a.

    A great low variable rate with no annual fees & make extra repayments without any penalties.

    • 3.67% p.a.

    • 3.69% p.a.

    • $275

    • $0.00

    • $300.00

    • yes - free

    • yes - free

    • no

    • 85.00%

    • $50,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

*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.

Crunching the numbers

On a $300,000 home loan over 30 years, the difference between the cost of the average home loan rate and the lowest in the Mozo database is $59,276 - a considerable chunk of change for a household to save*.

“There’s potentially tens of thousands of dollars in savings up for grabs for those who take the time to shop around and find a great deal,” said Lamont.


Tips for choosing a bargain home loan rate

  • Check the comparison rate. One really handy tool when trying to decide what the best value loan for you is, is the comparison rate. This rate takes into account both the interest and guaranteed fees on a loan, to give you a more accurate idea of the ‘true’ cost of a loan and help you compare your options on even footing.

  • Decide what you really need. Many home loans come with a bunch of handy features like free extra repayments and offset accounts which can save you a tonne of money on interest. The downside is that full feature home loans often have more fees or higher interest rates attached. So it’s worth working out exactly what features you’ll use and look for a home loan to suit, so you’re not paying for extras you don’t use.

  • Compare your options. An easy way to compare a heap of home loans from a wide array of lenders is to use our home loan comparison table. Or, if you’re refinancing, take our Switch and Save calculator for a whirl to find out how much a better deal could save you.

*Based on a $300,000 loan over 30 years, 80% LVR, principal and interest repayments. Lowest rate in the Mozo database is 3.49% from Reduce Home Loans.

Mozo may receive advertising fees from the financial institutions, issuers of financial or credit products and third party advice providers that are shown on this page. These fees are based on a cost per click, cost per acquisition, or a fixed fee.