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

  • loans.com.au Essentials Variable 80

    Owner Occupier, Principal & Interest

    3.64% p.a.

    3.66% p.a.

    No monthly fees and receive a super-low rate available to purchases & refinance.

    • 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

  • NAB Base Variable Rate Home Loan Special Offer

    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

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

    UBank UHomeLoan - Discount Offer

    Owner Occupier, Principal & Interest

    3.69% p.a.

    3.69% p.a.

    Refinance your home loan and get a surprise bonus $1000 into a USaver account

    • 3.69% p.a.

    • 3.69% 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

  • Bankwest Complete Variable Home Loan Special

    LVR<=89%, Owner Occupier, Principal & Interest

    3.70% p.a.

    4.13% p.a.

    $0 home loan application fees. Only 10% minimum deposit and $0 annual fee on your choice of a rewards credit card.

    • 3.70% p.a.

    • 4.13% p.a.

    • $250

    • $395.00 yearly

    • $338.20

    • yes - free

    • yes - free

    • yes

    • 90.00%

    • $200,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • Newcastle Permanent Discounted Variable Home Loan

    Owner Occupier, Principal & Interest

    3.64% p.a.

    4.03% p.a.

    Experts Choice - 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

    • 80.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Details Close

  • Bendigo Bank Variable Rate Residential Special Offer

    Owner Occupier, Principal & Interest

    3.79% p.a.

    4.06% p.a.

    Owner occupied variable, principal and interest rate of 3.79%*. 150,000 Bendigo Bank reward points.

    • 3.79% p.a.

    • 4.06% p.a.

    • $295

    • $20.00 monthly

    • $250.00

    • yes - free

    • yes

    • yes

    • 80.00%

    • $150,000

    • -

    • 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.

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