Greater Bank is cutting some fixed mortgage interest rates by 0.20 percentage points on Tuesday, for homeowners with a 20% deposit.
The cuts drop the bank’s ‘no-frills’, one-year fixed home loan down to an interest rate of 1.69% (3.49% comparison rate), which is the lowest on record in Canstar’s home loan database at the time of writing.
Homeowners could save $6,361 in the first year just by switching from the average variable rate to the lowest fixed rate on our database, according to analysis by Canstar’s research team.
Canstar money expert Effie Zahos said chasing a low rate should be on every homeowners’ radar.
“Today’s move from Greater Bank proves competition is still rampant in the home lending space and it may make sense to lock in either some or all of your home loan if you want to take advantage of these rock-bottom fixed rates before they swing the other way round,” Ms Zahos said.
The new rates are available to new and existing customers of Greater Bank, but existing customers who are already locked into a fixed loan will miss out.
Ms Zahos said if you’re going to lock in a competitive rate for one year, then it’s important to understand the other rates on offer from that lender to give you an idea of what your home loan rate could revert to at the end of the fixed rate period, unless you are willing to move again.
To help with that, we’ve highlighted what loan these fixed rate deals would revert to after one year, and the current variable interest rate that applies, below.
Greater Bank’s new lowest home loan rates:
|Home loan||Interest rate||Comparison rate||Loan it reverts to at end of fixed-rate period||Interest rate||Comparison rate|
|Great Rate Fixed 1-year, no-frills home loan||1.69%||3.49%||Ultimate Variable, package home loan||3.46%||3.88%|
|Ultimate Fixed 1-year, packaged home loan||1.69%||3.72%||Great Rate Variable, no-frills home loan||3.66%||3.67%|
Source: www.canstar.com.au – 9/02/2021. Based on owner-occupier home loan changes from Greater Bank recorded on Canstar’s database, available for a loan amount of $400,000, 80% LVR and principal & interest repayments. Revert rate refers to the interest rate a loan would switch to at the end of the fixed rate period if the borrower did not change to a different rate at that time. ^Comparison rates calculated based on a $150,000 loan amount over a total loan term of 25 years.
Extra features of these loans:
- Split loan option is available for the Ultimate and Great Rate fixed loans. There are no application fees or additional fees per split.
- Extra repayments are accepted and can be up to 5% of the initial loan amount before a fee is charged. For instance, if a loan was initially approved for $500,000, extra repayments of up to $25,000 could be made before a fee applies.
- Redraw facility is available where the customer has an unlimited amount of redraws, but there is no offset account.
Should you split your home loan? Consider this…
New research from Canstar shows 91% of lenders on our database allow borrowers to split their loan. The analysis reveals that some lenders allow borrowers to split their loan up to 10 times. The average fee for setting up a split loan is $213.
One reason this could be an appealing option is if mortgage holders want to take advantage of fixed rates that continue to lead the market, but also keep their options open to have part of the loan on a variable rate.
“If the lender offers a suite of competitive fixed rates, then you could consider splitting your loan across several fixed terms and even a variable rate,” Ms Zahos said.
“This way after the one-year fixed rate expires, you’re not exposing the entire loan to whatever the market rates are at the time, as you’ve locked in to various terms.”
She said an added bonus of splitting your loan into multiple fixed terms was that if your lender allows extra repayments during the fixed terms, you may effectively double or triple the amount of additional repayments you can make.
“Of course, be sure to weigh up any account fees first, as this could offset the savings,” she cautioned.
Lowest home loan rates on Canstar’s database
There are currently 138 home loan rates below 2% on Canstar’s database, with options available for variable and fixed loans.
The below table reveals the lowest interest rates for owner-occupiers, detailing which loan features are available with these products.
Top 5 lowest owner-occupier home loan rates
|Greater Bank||Great Rate Fixed 1 yr||1.69%||3.51%||95%||No||Yes||$1,417|
Fixed PI 3 yrs
P&I 2 yrs
Source: www.canstar.com.au – 9/02/2021. Based on owner-occupier loans available for a loan amount of $400,000 on Canstar’s database. One product per provider is listed. Top 5 selected and table sorted in ascending order by rate, followed by comparison rate. Comparison rates calculated for a loan of $150,000 over a total loan term of 25 years. Monthly repayment assumes principal and interest repayments on a $400,000 loan over 30 years, and for fixed loans is only indicative of the monthly repayment during the fixed period.