Top rates for top marks: Australians to be rewarded with cheaper home loans for good credit history

Tom Watson

02 Nov 2017

Credit score could determine your home loan rate content

Australians may soon be rewarded for their good credit history with cheaper home loan and credit card rates under a new initiative set to be announced by Treasurer Scott Morrison at the Intersekt fintech festival in Melbourne later today. 

The changes, which are reported to come into effect from July 1 next year, are expected to help borrowers and customers use their good credit history to leverage better deals from providers on a range of financial products including home loans, personal loans, business loans and credit cards.

"This will be a game-changer for both consumers and lenders, and will lead to greater competition in lending and naturally provide better access to finance for Australian households and small businesses," Mr Morrison is expected to say. 

"For borrowers, this regime should lead to one thing - a better deal on your mortgage, your personal loan or business loan.”

The announcement will come as part of a larger mandate which will require ANZ, Commonwealth Bank, NAB and Westpac to share more detailed data about their customers credit history in order to improve competition between providers. 

"If you have a good credit history - you're paying down your mortgage, you haven't missed a payment on your car loan and your credit cards are under control - you will be able to demand a better deal on your interest rates, or shop around, armed with your data," Mr Morrison will say.

"We intend to start with the four major banks, given they account for approximately 80 per cent of the volume of lending to households. Other credit providers would likely follow suit quickly to improve their competitive position in the market."

Similar systems which reward customers with better credit history already exist in the United Kingdom and United States, and while the Australian initiative is expected to target home loans at first, the Herald Sun has reported that the Federal Government may extend the rules to cover phone and energy providers in the future.  

While the changes are likely to be of benefit to those with better credit history, Mozo Data Manager Peter Marshall expects that some Australians may be worse off. 

“It’s going to be great for those who are lucky enough to have a great credit history, but those that do have some blemishes on their record can expect to be paying higher rates,” he said. 

“The banks are unlikely to want to give up any of their profit margins, so if some consumers are getting better rates it stands to reason that some consumers will be getting worse rates.”

Home Loans

Rates updated daily. Advertiser disclosure.

  • loans.com.au
    Mozo Expert Choice Badge" style="width:60px;">

    1.99% p.a.variable for 12 months and then 2.48% p.a. variable

    2.47% p.a.

    $1234

    Product details Close details
    Smart Booster Home Loan

    1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    1.99% p.a.variable for 12 months and then 2.48% p.a. variable

    2.47% p.a.

    A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required. Winner of two Mozo Expert's Choice Award for 2021.

    Smart Booster Home Loan

    A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required. Winner of two Mozo Expert's Choice Award for 2021.

    • 1.99% p.a.variable for 12 months and then 2.48% p.a. variable

    • 2.47% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • Optional - with 0.10% additional interest

    • $520

    • 80.00%

    • $50,000

    • $1,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Smart Booster Home Loan

    Details Close

  • UBank

    1.75% p.a.
    fixed 3 years

    2.22% p.a.

    $1234

    Product details Close details
    UHomeLoan

    Owner Occupier, Principal & Interest

    1.75% p.a.
    fixed 3 years

    2.22% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    UHomeLoan

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    • 1.75% p.a.
      fixed 3 years

    • 2.22% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free up to $20,000 p.a.

    • no

    • no

    • $0

    • 80.00%

    • $100,000

    • $2,000,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • $395 Establishment fee waived for fixed rate loans that settle by 30 September 2022. Receive 1.75% 3 year fixed rate when you apply by 29 April 2021 and settle within 90 days.

    Read our Mozo Review to learn more about the UHomeLoan

    Details Close

  • Macquarie

    2.09% p.a.
    fixed 3 years

    2.43% p.a.

    $1234

    Product details Close details
    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    2.09% p.a.
    fixed 3 years

    2.43% p.a.

    Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.

    Basic Home Loan

    Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.

    • 2.09% p.a.
      fixed 3 years

    • 2.43% p.a.

    • $0

    • $0.00

    • $400.00

    • yes - free

    • yes - free

    • no

    • $0

    • 70.00%

    • $150,000

    • $750,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Monthly

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

    Details Close

  • Athena
    Mozo Expert Choice Badge" style="width:60px;">

    2.19% p.a. variable

    2.19% p.a.

    $1234

    Product details Close details
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    2.19% p.a. variable

    2.19% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid off. Free extra repayments and redraw facility. Zero fees to consider. Min 40% deposit required. Winner of three Mozo Expert's Choice Award for 2021.

    Celebrate Variable Home Loan

    Fast and efficient online application. Automatic discounts as loan is paid off. Free extra repayments and redraw facility. Zero fees to consider. Min 40% deposit required. Winner of three Mozo Expert's Choice Award for 2021.

    • 2.19% p.a. variable

    • 2.19% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 60.00%

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

    Details Close

^See information about the Mozo Experts Choice Home loans Awards

While consumers might not be able to take advantage of any changes until mid-2018, borrowers could still be saving money on their home loans by making the switch to a cheaper rate. To get started, head over to the Mozo home loan comparison hub to compare products from a range of providers. 

Four tips to help your credit score

  1. Minimise unnecessary spending: The first step to getting your finances back on track is to set a budget and cut out any spending you really don’t need - that way you have more at your disposal to pay off debt. 
  2. Pay those outstanding bills: The longer you delay, the more negative your rating could be. If you are struggling to pay a particular bill, just remember that you can always call your provider to try and negotiate a payment plan.
  3. Avoid using a credit card for everyday purchases: While a balance transfer offer may be a great way to chip away at your debt, don’t be tempted to use your credit card for everyday purchases when it could just add to your debt and hurt your credit rating. 
  4. Close your unused accounts: In the eyes of credit providers all of those accounts you don’t use but still have open are considered to be potential debt, so if you don’t us them it’s time to close them.