New lowest home loan rate down to 1.79% (1.84% comparison rate)

Homestar Finance has jumped the gun ahead of today’s cash rate decision and delivered an interest rate cut for new home loan customers looking to refinance.

Homestar has reduced its ongoing variable rate Star Gold home loan to 1.79% (1.84% comparison rate) for new customers who have a loan-to-value ratio of up to 60% – or a deposit of at least 40%.

The rate is likely to appeal particularly to refinancers who already have that much equity available to enable them switch to the lower rate, but it will not be available to borrowers who have an existing loan with Homestar.

It’s available for a limited time for people who sign up by the end of this year, before the special ends, and who have their application settled by 31 March, 2021.

Prospective borrowers can apply for the rate on loan amounts of at least $250,000 and up to a maximum of $850,000, Homestar’s website states.

In the terms and conditions, Homestar says it requires at least one applicant for the Star Gold loan to be employed.

The new rate will become the lowest mortgage rate on Canstar’s database at the time of writing, beating the former record holder, Reduce Home Loans, by 0.10 percentage points.

Homestar announced its move just one day before the Reserve Bank of Australia’s (RBA) monetary policy decision for November, where experts have widely anticipated the official cash rate will be cut from its existing record low of 0.25%.

Such a move by the RBA would likely have borrowers watching to see if their interest rates on home loans, savings accounts and other financial products trend down further as well.

This year, Canstar has observed a downward trajectory of consumer interest rates, with our database showing 94 lenders cut variable home loan rates in 2020 by an average of 0.36 percentage points, bringing the average rate on our database down from 3.73% to 3.37%.

The lowest variable rate for owner-occupiers paying principal and interest with a LVR of 80% was 2.74% (2.79% comparison rate) in January, though this has come down by 0.55 percentage points to 2.19% (2.20% comparison rate) at the time of writing.

Fixed rates have been cut by an average of 0.67 percentage points, by 72 lenders.

→ Will the banks pass on any more Reserve Bank interest rate cuts?

1. 1.79% – Homestar Finance’s Star Gold <60%*, maximum 60% LVR (comparison rate 1.84%)
2. 1.89% – Reduce Home Loans’ Rate Cutter Variable <60%, maximum 60% LVR (comparison rate 1.98%)
3. 1.99% – Pacific Mortgage Group’s Variable P&I <60%, maximum 60% LVR (comparison rate 1.99%)
4. 1.99% – loans.com.au’s Smart Booster Home Loan Intro 1 yr, maximum 80% LVR (comparison rate 2.47%)
5. 1.99% – Illawarra Credit Union’s The Works Package Home Loan P&I 2 yr Intro, maximum 95% LVR (comparison rate 2.93%)

Source: www.canstar.com.au – 3/11/2020. Based on owner-occupier variable rate loans available for a loan amount of $400,000 and principal & interest repayments, including introductory loans but excluding first home buyer-only loans. Table sorted in ascending order by rate, followed by comparison rate. Comparison rates calculated based on a $150,000 loan amount over a total loan term of 25 years. Read the Comparison Rate Warning. ^Includes rates on Canstar’s database as well as the Star Gold product referred to in this article. *This is a limited-time special, only available on applications received by 31 December 2020 and settled by 31 March 2021.

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