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.

Snag a low rate home loan today - rates updated daily

  • Promoted

    UBank

    3.59% p.a.

    3.59% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    Enjoy a low rate Home Loan with no bank fees on variable rate loans. Easy & fast to apply, simply choose between flexible repayments and make extra repayments for free. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.

    • 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

    Read our Mozo Review to learn more about the UHomeLoan - Discount Offer

  • Promoted

    HSBC

    3.59% p.a.

    3.61% p.a.

    $1234

    Product details Close details
    Discounted Home Value Loan

    Enjoy a discounted rate for the life of the loan plus $0 establishment fee when you apply by 30 April (t&cs apply). Get help with the application process with an HSBC relationship manager. Winner of a Mozo Experts Choice Award 2019 in the Low Cost Home Loan category.

    • 3.59% p.a.

    • 3.61% p.a.

    • $150

    • $0.00

    • $300.00

    • yes - free

    • yes - free online

    • no

    • 90.00%

    • $50,000

    • $7,500,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Discounted Home Value Loan

  • Promoted

    Athena

    3.59% p.a.

    3.57% p.a.

    $1234

    Product details Close details
    Variable Home Loan

    Featuring no application fees, no monthly fees & no annual fees, new-comer Athena, brings you stay-great rates for the entirety of the loan, so you pay it off faster. A digital and direct lender, Athena's goal is to pass the savings onto you.

    • 3.59% p.a.

    • 3.57% p.a.

    • $488

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • 80.00%

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Variable Home Loan

  • Promoted

    Hot Deal Upfront fees waived for refinance applications (Apply by 2 May 2019)(T&Cs apply)

    Homestar

    3.49% p.a.

    3.49% p.a.

    $1234

    Product details Close details
    Star Essentials Home Loan

    A super low rate home loan packed with the essentials. No application or ongoing fees. Unlimited additional repayments. For a limited time, refinancers can save more with third party upfront fees waived – so get in quick! (Apply by 2 May 2019). Minimum loan size $200,000.

    • 3.49% p.a.

    • 3.49% p.a.

    • $0

    • $0.00

    • $535.00

    • yes - free

    • yes - free

    • no

    • 70.00%

    • $200,000

    • $749,999

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Star Essentials Home Loan

  • Promoted

    Well Home Loans

    3.49% p.a.

    3.53% p.a.

    $1234

    Product details Close details
    Well Balanced

    Well Balanced home loan is a low rate home loan with free online redraw and no valuation fee. Purchase, Refinance or Equity Release purposes allowed. Best New Home Loan in Mozo Experts Choice Awards 2019.^

    • 3.49% p.a.

    • 3.53% p.a.

    • $850

    • $0.00

    • $300.00

    • yes - free

    • yes - free

    • yes - $10/month

    • 80.00%

    • $10,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Well Balanced

  • Promoted

    RACQ Bank

    3.99% p.a.

    4.39% p.a.

    $1234

    Product details Close details
    Mortgage Breaker Investor Special Choices Package

    Unlimited additional repayments and No account keeping fees. Split loan available and 100% offset for P&I loans.

    • 3.99% p.a.

    • 4.39% p.a.

    • $0

    • $395.00 yearly

    • $297.00

    • yes - free

    • no

    • yes

    • 90.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Investor

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Mortgage Breaker Investor Special

*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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