Is your home loan competitive? Our Star Ratings could help you find out

With Australia’s official cash rate hitting yet another historic low this month following two separate cuts in the space of weeks, the home loan market has rarely been more competitive than it is right now.

In a bid to attract and retain customers, lenders have been sharpening their rates and hoping the additional features and services on offer will be enough to woo borrowers. 

But what difference could a loan that offers outstanding value relative to its competitors make to your finances? Canstar Research has crunched the numbers to reveal the products and lenders on its database offering 5-Star value to Aussie homeowners.

In its latest six-monthly Home Loan Star Ratings, Canstar rated 4,185 home loans from 88 providers on its database, and recognised the products that offer outstanding value for specific consumer profiles based on various loan sizes, types and purposes. 

Products that received 5 Stars were deemed to offer outstanding value within that profile. 

Then based on these individual product Ratings, some lenders have been awarded an overall 5-Star Rating in recognition of the outstanding value they were deemed to provide  in various broader borrower profiles, compared to the other providers on the Canstar database. 

What makes for a 5-Star home loan in 2020? 

Home loans were rated using a methodology which takes both price (interest rate and fees) and features (such as ease of applying for, managing, varying, and discharging your home loan) into account, and were given a rating between one and five stars. 

This year’s overall 5-Star Rated providers generally had strong feature offerings, and when it came to price, consistently beat the market average on both average interest rates and maximum total loan costs. 

To give you an idea of the difference a 5-Star loan could make, the tables below display the average interest rates for loans on our database over a 30-year term, and compares it to the average rates and costs of 5-Star Rated products. 

Interest savings are based on a $350,000 loan amount with a loan-to-value ratio of 80% and are for the database averages against the 5-Star averages, with the borrower making principal and interest payments and paying off the loan over 30 years. Calculations exclude ongoing and one-off fees and assume that fixed loans will be re-fixed at the same rate for the duration of the loan. 

Owner-Occupier Home Loans
Loan Type Minimum Rate Maximum Rate Average 5 Star Rate Average Market Rate Potential Interest Saving over 30 years
Variable 2.74% 7.07% 3.00% 3.87% $60,917.34
1 Year Fixed  2.74% 5.09% 2.85% 3.49% $44,010.89
2 Year Fixed 2.69% 4.95% 2.87% 3.35% $32,871.21
3 Year Fixed 2.69% 5.05% 2.88% 3.37% $33,591.22
5 Year Fixed 2.88% 5.34% 3.00% 3.68% $47,311.08
Based on a $350,000 loan amount at 80% loan to value ratio with principal and interest payments.  All applicable products assessed in Canstar’s March 2020 Home Loan Star Ratings have been considered. Potential Interest Savings based on the difference in total repayments paid over 30 years at the respective average rates. Fees and revert rates not considered.
Investment Home Loans
Loan Type Minimum Rate Maximum Rate Average 5 Star Rate Average Market Rate Potential Interest Saving over 30 years
Variable 3.09% 6.19% 3.28% 4.12% $59,855.99
1 Year Fixed  2.89% 5.17% 3.13% 3.63% $34,883.38
2 Year Fixed  2.89% 5.25% 3.09% 3.46% $25,630.14
3 Year Fixed  2.84% 5.35% 3.06% 3.45% $26,978.40
5 Year Fixed  3.19% 5.61% 3.29% 3.77% $33,826.61
Based on a $350,000 loan amount at 80% loan to value ratio with principal and interest payments. All applicable principal and interest products assessed in Canstar’s March 2020 Home Loan Star Ratings have been considered.  Potential Interest Savings based on the difference in total repayments paid over 30 years at the respective average rates. Fees and revert rates not considered.

Source: Canstar Research as of February 2020 (the end of the period during which the Ratings were carried out). Please note that in light of the recent RBA cash rate cuts and subsequent home loan rate movements, current interest rates, averages and costs may be different to those shown above.

Overall 5-Star Rated home loan providers

Below are the providers (listed in alphabetical order) that have been recognised for excelling in the various product categories that Canstar Research assessed in its latest Home Loan Star Rating calculations:

Home Lender

Awarded to the home loan providers on our database found to offer a combination of outstanding value fixed and variable-rate owner-occupier home loan products. 

  • Adelaide Bank
  • AMO Group
  • Bank of Melbourne
  • BankSA
  • Freedom Lend
  • HSBC 
  • Qudos Bank
  • RACQ Bank
  • St.George Bank
  • TicToc Home Loans
  • UBank

Home Lender Variable

Awarded to the lenders who have been recognised for their range of outstanding value variable-rate owner-occupier home loans. 

  • Freedom Lend
  • Homestar Finance 
  • HSBC 
  • loans.com.au
  • Pacific Mortgage Group
  • State Custodians 
  • TicToc Home Loans
  • UBank

Home Lender Fixed

This overall 5-Star Rating goes to home loan providers who’ve demonstrated they offer high value to customers taking out fixed-rated owner-occupier home loans. 

  • Adelaide Bank
  • AMO Group
  • Bank of Melbourne
  • BankSA
  • Greater Bank
  • HSBC
  • IMB
  • Qudos Bank
  • St.George Bank
  • TicToc Home Loans
  • UBank

Investment Home Lender 

A 5-Star Rating granted to home loan providers that provide value in both their fixed and variable-rate home loans for investment purposes. 

  • Adelaide Bank
  • Freedom Lend
  • Greater Bank
  • Homestar Finance
  • Newcastle Permanent 
  • Nexus Mutual
  • RACQ Bank
  • TicToc Home Loans

Investment Fixed Home Lender

The home loan providers below have been recognised for their fixed-rate investment home loans and the value they offer to customers. 

  • Arab Bank Australia 
  • bcu
  • Freedom Lend
  • Greater Bank
  • Newcastle Permanent 
  • Nexus Mutual
  • RACQ Bank
  • TicToc Home Loan
  • UBank

Investment Variable Home Lender

These home loan providers were commended for offering strong value overall to their variable-rate investment home loan customers. 

  • Athena
  • Freedom Lend
  • Homestar Finance
  • Mortgage House
  • Newcastle Permanent 
  • Pacific Mortgage Group
  • RACQ Bank
  • State Custodians 
  • TicToc Home Loans 

Line of Credit

For those in the market for a line of credit home loan, the lenders below have been recognised for the high value their line of credit home loan products offer. 

  • Aussie
  • BankVic
  • Greater Bank
  • Nexus Mutual
  • State Custodians
  • Suncorp Bank

For more information on how these Star Ratings and how they were calculated, you can read the Home Loan Star Ratings methodology document

Share this article