bcu cuts home loan rates to the cheapest on Canstar's database

The lowest home loan rate available on Canstar’s database has changed, with bcu cutting its one-year fixed rate for homeowners to a new record low. And investors won’t miss out on a cheaper rate either.
bcu cheapest home loan rate
There’s a new lowest home loan rate, coming from a member-owned bank. Image source: A Sharma, Shutterstock.com.

Member-owned bank bcu has cut one-year and two-year owner-occupier and investor mortgage rates by between 0.20 and 0.31 percentage points today.

Significantly, the changes introduce a new record-low fixed rate for owner-occupiers at 1.67% for one year (comparison rate 3.84%), and new record-low rates for investors.

bcu’s new offering for homeowners undercuts the previous cheapest home loan rate provider on our database – Greater Bank – which dropped a range of fixed interest rates in early February to 1.69% (comparison rates starting at 3.49%).

According to analysis by our research team, homeowners could save up to $7,901* on interest in the first year by switching from the average variable rate to the new lowest fixed rate on Canstar’s database, although prospective borrowers should also factor in any switching fees that may apply.

The following new rates from bcu have set new records as the cheapest of their kind on Canstar’s database:

Homeowners: New lowest bcu owner-occupier home loan rate

  • 1.67% (cut by 0.31 percentage points) – one-year fixed, principal and interest (P&I) repayments, 3.84% comparison rate.

Investors: New lowest bcu investment home loan rates

  • 1.87% (cut by 0.31 percentage points) – one-year fixed, P&I repayments, 4.00% comparison rate.
  • 1.98% (cut by 0.20 percentage points) – two-year fixed, P&I repayments, 3.82% comparison rate.
  • 1.97% (cut by 0.31 percentage points) – one-year fixed, interest-only (IO) repayments, 4.01% comparison rate.
  • 2.08% (cut by 0.20 percentage points) – two-year fixed, IO repayments, 3.84% comparison rate.

Remember revert rates, and check loan features

Borrowers taking out these loans will want to watch out for revert rates. For instance, the one-year fixed owner-occupier loan reverts to bcu’s standard variable rate at the end of the fixed rate period, unless the borrower switches to a new rate in time. This standard variable rate is currently 4.06% (4.06% comparison rate), which is considerably higher than the fixed rate offer, and could change at any time.

It may be helpful to know, however, that bcu’s loan features include the ability for borrowers to split their loan. This could be appealing to mortgage holders who want to take advantage of fixed rates that continue to lead the market, but also want to have part of their loan on a variable rate to access extra features. A bcu split loan comes with a one-off splitting fee of $300, but no additional fees apply at the time of writing.

bcu confirmed to Canstar it does not allow borrowers to make any additional repayments on its fixed rate loans. The ability to do so can be an appealing feature for borrowers who may want to pay down their loan faster.

There are also no redraw or offset facilities available on bcu’s fixed rate loans – at the time of writing, these are only offered on its variable rate products or the variable portion of split loans.

Longer-term fixed rates hiked

Along with today’s cuts, bcu also increased four and five-year fixed rates by up to 0.20 percentage points, continuing the recent trend Canstar has observed of lenders increasing their longer-term fixed rates – Bankwest, Greater Bank, Newcastle Permanent and Northern Inland Credit Union hiked their four and/or five-year fixed rates last week.

But there are still a multitude of competitive rates to be found, with nearly 190 interest rates currently below 2% on Canstar’s database, the vast majority (167) of which are fixed rates.

Lowest owner-occupier home loan rates on Canstar’s database

  1. 1.67% – bcu’s Residential Fixed P&I 1 yr, maximum loan-to-value (LVR) of 95%, 3.84% comparison rate
  2. 1.69% – Greater Bank’s Great Rate Fixed 1 yr, maximum LVR of 95%, 3.49% comparison rate
  3. 1.69% – RACQ Bank’s^ Choices Residential Fixed 1 yr, maximum LVR of 90%, 4.15% comparison rate
  4. 1.74% – Homestar Finance’s Star Fixed P&I 2 yrs, maximum LVR of 80%, 2.23% comparison rate
  5. 1.75% – UBank’s UHomeLoan Fixed P&I 3 yrs^^, maximum LVR of 80%, 2.22% comparison rate

Source: www.canstar.com.au – 23/04/2021. Based on owner-occupier fixed or variable loans available for a loan amount of $500,000, at any LVR and with principal & interest repayments on Canstar’s database; excluding first home buyer-only loans. Top five selected and list sorted in ascending order by rate, followed by comparison rate. One product per provider is listed. Comparison rates calculated on a loan of $150,000 with a term of 25 years. Read the Comparison Rate Warning. ^RACQ Bank home loans are only available for security held in Queensland. ^^UBank 1.75% 3-year fixed rate special offer available where application is received by 29 April 2021.

*Interest saving source: www.canstar.com.au – 23/04/2021. Based on owner-occupier loans available on Canstar’s database for a loan amount of $500,000, 80% LVR and principal & interest repayments; excludes introductory and first home buyer only loans. Interest calculations assume a total loan term of 30 years, and are only indicative of the repayment/interest costs in the first year of the loan.

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