86 400 cuts fixed home loan rates, but not in line with partner UBank

ELLIE MCLACHLAN
Neobank 86 400 is cutting some shorter-term fixed home loan rates for homeowners and investors today, keeping things ‘business as usual’ for now despite its impending merger with UBank.
86 400 fixed rate cuts June 2021
What difference could a cheaper home loan rate make to your budget? Image source: pada smith, Shutterstock.com.

86 400 has cut one, two and three-year owner-occupier fixed rates by up to 0.31 percentage points today. Investor rates on one and three-year fixed loans were also cut by up to 0.15 percentage points.

86 400’s new owner-occupier rates, 20% deposit, principal and interest repayments

  • One year fixed, cut by 0.31 percentage points: 1.84% (2.76% comparison rate)
  • Two year fixed, cut by 0.09 percentage points: 1.89% (2.72% comparison rate)
  • Three year fixed, cut by 0.16 percentage points: 1.99% 2.69% comparison rate)

86 400’s new investor rates, 20% deposit, principal and interest repayments

  • One year fixed, cut by 0.15 percentage points: 2.24% (3.02% comparison rate)
  • Three year fixed, cut by 0.15 percentage points: 2.24% (2.93% comparison rate)

86 400’s new investor rates, 20% deposit, interest-only repayments

  • One year fixed, cut by 0.15 percentage points: 2.44% (3.03% comparison rate)
  • Three year fixed, cut by 0.10 percentage points: 2.49% (2.98% comparison rate)

The neobank’s fixed interest rates are the same for borrowers with larger deposits of 30% or 40%, although the comparison rates are slightly lower for those customers.

Canstar finance expert Steve Mickenbecker said 86 400’s changes did not see its home loan rates align with its new partner, NAB’s digital subsidiary UBank, which currently has cheaper mortgage rates on offer.

For instance, UBank’s one year-fixed home loan has a rate of 1.75% (2.31% comparison rate) compared to 86 400’s 1.84% (2.76% comparison rate) for owner-occupiers with a 20% deposit paying principal and interest.

The two banks have been officially approved to merge, and are set to launch a new bank together soon, following NAB’s acquisition of 86 400.

“At this stage of the merger it’s business as usual for 86 400,” Mr Mickenbecker said.

While 86 400’s shorter-term rates were lowered today, the neobank left its five-year rates unchanged.

“In a sign of the times, its five-year fixed rate has been left at a relatively high 2.50% (2.81% comparison rate), a full 0.51 percentage points higher than the new three-year rate,” Mr Mickenbecker said.

Canstar has noticed a trend of lenders having higher longer-term fixed rates in recent months, as banks come towards the end of cheap funding available from the Reserve Bank under its Term Funding Facility.

While that is occurring, there are still 193 home loans on Canstar’s database at the time of writing with an interest rate under 2%. The large majority of these are fixed, with several two-year fixed loans in particular.

Lowest home loan rates on our database by term

  • One-year fixed: 1.67% (comparison rate 3.84%) on bcu’s Residential Fixed P&I 1 yr loan, maximum LVR of 95%
  • Two-year fixed: 1.78% (comparison rate 3.66%) on bcu’s Residential Fixed P&I 2 yrs loan, maximum LVR of 95%
  • Three-year fixed: 1.79% (comparison rate 3.33%) on Credit Union SA’s Fixed Home Loan Package P&I 3 yrs Special Offer loan, maximum LVR of 80%
  • Four-year fixed: 2.04% (2.07% comparison rate) on Hume Bank’s myBlue P&I Fixed 4 yrs loan, maximum LVR of 60%
  • Five-year fixed: 2.24% (2.33% comparison rate) UBank’s UHomeLoan Fixed P&I 5 yrs loan, maximum LVR of 80%
  • Variable: 1.77% (1.86% comparison rate) Reduce Home Loans’ Super Saver Variable loan, maximum LVR of 60%

Source: www.canstar.com.au – 15/06/2021. Based on owner-occupier loans on Canstar’s database, available for a loan amount of $500,000, at any LVR and with principal & interest repayments; excludes first home buyer-only loans. Comparison rate calculated based on a loan amount of $150,000 and loan term of 25 years. Read the Comparison Rate Warning. Top rate in each term selected based on the product with the lowest rate, followed by lowest comparison rate.


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This content was reviewed by Sub Editor Tom Letts as part of our fact-checking process.


Ellie McLachlan is responsible for leading and breaking financial news on mortgages, money and much more. Ellie studied a Bachelor of Journalism and Arts at UQ and has worked at major metropolitan and regional news organisations.

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