New home loan commitments in Australia have reached record highs, with house prices continuing to soar. In December 2020 alone, the value of new home loans surged by 8.6% month on month and jumped 31.2% year on year, according to recent lending data from the Australian Bureau of Statistics.
This recent growth may have been helped along by government stimulus, such as the HomeBuilder grant, as well as the record-low interest rates currently on offer.
“It’s the most amazing home loan market that I’ve ever seen,” Canstar finance expert Steve Mickenbecker said. “I never thought I’d see rates this low, but here we are.”
Although there are competitively-priced fixed and variable rates, Mr Mickenbecker said most of the lowest rates are fixed. This means homeowners need to decide whether they want to fix their loan or not, or if their loan allows a split between variable and fixed, how much of it to fix.
“By choosing a fixed home loan, you might not pick the bottom of the market, but you are doing it for certainty of repayments and to lock in your repayments at an affordable level,” he said.
“But be aware you may give up some flexibility, such as the ability to make extra repayments and potentially close off the loan without costs down the track.”
Homeowners with variable loans need to be prepared to switch lenders if they can’t get the deal they want, Mr Mickenbecker said.
“The average variable home loan is 3.32% and if you can switch to a loan with a lower rate, then you could save thousands a year in repayments.”
Canstar Home Loan Awards 2021
To help Aussies choose a home loan, Canstar has assessed and rated 3,293 products from 85 home loan providers on our database. Based on this analysis, Canstar has given 25 providers an Outstanding Value Award.
These Awards recognise the lenders that provide Outstanding Value to borrowers through their suite of home loan products. Each product considered has been assessed based on both price and features. The Price Score involves considerations such as interest rates and fees, while the Feature Score considers factors such as pre-approval, redraw and offset facilities and the ability to split the loan so a portion of the loan has a fixed rate and the rest has a variable rate.
For more information on how Canstar’s Home Loan Awards are determined, view the methodology report.
What difference could an Award-winning provider make?
To show you how much you could save in interest, Canstar has compared the interest rates of the Award winners against the other providers on our database. We have considered fixed and variable home loans for owner occupiers and investors.
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| Award winners |
All providers on Canstar’s database |
|||
|---|---|---|---|---|
| Average | Average | Minimum | Maximum | |
| Variable home lender |
2.26% | 3.32% | 1.99% | 5.49% |
| Fixed home lender (3-year fixed) |
2.08% | 2.33% | 1.89% | 4.49% |
| Variable investment home lender |
2.90% | 3.71% | 1.99% | 5.62% |
| Fixed investment home lender (3-year fixed) |
2.31% | 2.69% | 2.19% | 4.09% |
Source: www.canstar.com.au – 10/02/2021. Rates current as of 10/02/2021. Rates based on those available for a loan of $400,000 at 80% LVR, with principal and interest repayments. Average, minimum and maximum variable rates exclude variable loans with introductory periods and those exclusive to first home buyers. Institutions based on those included in the Canstar Home Loans Outstanding Value Awards (Feb 2021).
Which providers won?
There are seven individual Awards that make up the Outstanding Value – Home Loan Awards:
Home Lender Award
This Award is given to lenders that offer Outstanding Value across all owner occupier profiles. In alphabetical order, the winners are:
-
- AMO Group
- Bank of Melbourne
- Freedom Lend
- HSBC
- Pacific Mortgage Group
- St.George Bank
- TicToc Home Loans
- UBank
Variable Home Lender Award
This Award is given to lenders that offer Outstanding Value across all owner occupier variable rate profiles. In alphabetical order, the winners are:
- AMO Group
- Freedom Lend
- homeloans.com.au
- Homestar Finance
- Pacific Mortgage Group
- Reduce Home Loans
- TicToc Home Loans
- Yard
Fixed Home Lender Award
This Award is given to providers who offer Outstanding Value across all owner occupier fixed rate profiles. In alphabetical order, the winners are:
- Bank Australia
- Bank of Melbourne
- Freedom Lend
- Greater Bank
- HSBC
- Qudos Bank
- St.George Bank
- Teachers Mutual Bank (Firefighters Mutual Bank, Health Professionals Bank and UniBank)
- UBank
Investment Home Lender Award
This Award is given to providers who offer Outstanding Value across all investment profiles. In alphabetical order, the winners are:
- AMO Group
- Greater Bank
- HSBC
- MOVE Bank
- People’s Choice Credit Union
- QBANK
- RACQ Bank
- TicToc Home Loans
- UBank
Investment Variable Home Lender Award
This Award is given to Outstanding Value lenders across investment variable rate profiles. In alphabetical order, the winners are:
- Athena
- Credit Union SA
- Freedom Lend
- homeloans.com.au
- Homestar Finance
- loans.com.au
- Pacific Mortgage Group
- Reduce Home Loans
- TicToc Home Loans
Investment Fixed Home Lender Award
This Award is given to Outstanding Value lenders across investment fixed rate profiles. In alphabetical order, the winners are:
- Greater Bank
- HSBC
- MOVE Bank
- RACQ Bank
- Teachers Mutual Bank (Firefighters Mutual Bank, Health Professionals Bank and UniBank)
- TicToc Home Loans
- UBank
Line of Credit Award
This Award is given to Outstanding Value lenders across all line of credit profiles. In alphabetical order, the winners are:
- AMP Bank
- BankVic
- homeloans.com.au
Cover image source: Jandrie Lombard /Shutterstock.com
This article was reviewed by our Sub Editor Jacqueline Belesky and Finance & Lifestyle Editor Shay Waraker before it was published, as part of our fact-checking process.
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