UBank doesn’t hold back, passes on the full 0.25% cut to home loan customers

Niko Iliakis

02 Oct 2019

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UBank home loan customers were treated to some good news last night. Not too long after the RBA cut official interest rates by 0.25%, the online bank announced it will be doing the same across its range of variable rate home loans.

The decision puts UBank among a very exclusive list of lenders - which so far includes only Athena and Homestar - that have passed on the full RBA cut on all three occasions this year. 

Both new and existing variable home loan customers will be able to take advantage of the new rates - though there will be a bit of a wait. The changes will only come into effect on 29 October, 2019.

Once in place, the UBank UHomeLoan Discount Offer will offer owner occupiers variable rates as low as 2.84% p.a. (2.84% p.a. comparison rate*) when they take out a loan of at least $200,000 with an LVR below 80%.

A decrease of 0.25% will also mean serious savings for existing customers. UHomeLoan Discount Offer customers paying off a loan of $400,000 over 25 years could see savings in the range of $52 a month, or $624 over a year, once the new rates are applied.

The changes

• 0.25% reduction to UHome Loans Discount Offer for owner occupiers making principal and interest repayments. Rates now sit at 2.84% p.a. (2.84% p.a. comparison rate*).

• 0.25% reduction to UHome Loans Discount Offer for owner occupiers making interest-only repayments. Rates now sit at 3.38% p.a. (3.38% p.a. comparison rate*).

• 0.25% reduction to UHome Loan Investor Extra Offer for investors making principal and interest repayments. Rates now sit at 3.24% (3.24% comparison rate*).

• 0.25% reduction to UHome Loan Investor Extra Offer for investors making interest-only repayments. Rates now sit at 3.69% (3.69% comparison rate*).

RELATED: Homestar keeps the streak going, cuts home loan rates by 0.25

Since we received word of the RBA’s decision yesterday afternoon, the majority of lenders have been slow to make a move. At the time of writing, UBank is one of only six lenders that have announced cuts to variable home loan rates.

Of these, four are online lenders. With the big banks stuck worrying about their net interest margins, smaller online lenders have been able to race ahead and win over customers with much more attractive rates. 

“Unlike online lenders, the Big 4 have significantly higher cost structures associated with their branches and physical networks,” said Mozo Director, Kirsty Lamont.

“This means that as official interest rates approach zero percent, their ability to cut rates in line with their online only rivals will fall away.”

If you’re on the lookout for a home loan, then, online lenders could be a good place to start. Below, we’ve included a summary of the UHome Loan’s rates and features, but if you’d like to see what else is available, be sure to visit our variable rate home loan comparison page. 

Promoted

UBank UHomeLoan - Discount Offer
  • 2.84% p.a. for loans over $200,000 (2.84% p.a. comparison rate*) - Apply now to get this rate as of 29 October

  • Free extra repayments and redraw facility

  • No annual fees

The UHome Loan Discount Offer makes regular appearances on our list of best value home loans, and it’s about to get even cheaper. If they apply now, owner occupiers paying principal and interest on a loan of more than $200,000 will be looking at rates as low as 2.84% p.a. (2.84% p.a. comparison rate*) as of 29 October. What’s more, repayments can be made weekly, fortnightly or monthly, and you’ll also be able to pay down your loan quicker without facing any penalties. And if at some point you feel those extra funds would be better served back in your pocket, you can retrieve them using the free redraw facility.

*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 the amount and term you entered.

**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. 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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