New lowest home loan rate drops to 1.89% (1.92% comparison rate)

Reduce Home Loans has introduced a new record-low home loan rate that may appeal to some refinancers looking to take advantage of cheaper deals.
Reduce Home Loans has launched its new Rate Cutter Variable home loan product which has the lowest rate on Canstar’s database, at 1.89% (comparison rate of 1.92%).
The variable rate is available to residential owner-occupiers paying principal and interest repayments who have a minimum deposit of 40% (meaning a loan-to-value ratio, or LVR, of up to 60%).
According to Reduce, the loan allows unlimited repayments and a full redraw facility, but it doesn’t have an offset account feature.
Canstar finance expert Steve Mickenbecker said Reduce’s Rate Cutter loan represented a new record low for the home loan market that could be suited to refinancers.
“This new low rate comes on the back of a wave of rate reductions over the past few months, as several rates have fallen below 2%,” Mr Mickenbecker said.
“With a maximum loan-to-value ratio of 60%, the loan is clearly aimed at refinancers and shows the appetite lenders have for low-risk lending in this environment.”
How much could a 1.89% home loan cost per month?
Canstar’s research analysts crunched the numbers and found a hypothetical owner-occupier borrower paying the average rate on our database could save $306 per month and more than $110,000 in total interest by switching to Reduce’s new low rate.
This assumes they had just taken out a $400,000 home loan with 60% LVR, principal and interest repayments paid over 30 years and that rates remained the same.
Monthly mortgage repayments would be $1,763 for the average borrower, compared to $1,457 on the lowest home loan rate, while total interest paid over the life of the loan would be $234,627 compared to $124,366.
Important to note: The results from these calculations assume interest rates remain the same throughout the loan term and exclude the impact of fees. They should be used as an indication only. The specific details of your loan will be provided to you in your loan contract. It is advised that you consult your financial adviser before taking out or applying for a loan.
List of home loan rates currently under 2%
- 1.89% – Reduce Home Loans’ Rate Cutter Variable (1.92% comparison rate), maximum LVR of 60%
- 1.90% – Reduce Home Loans’ Rate Crusher 1 Year Fixed (2.39% comparison rate), maximum LVR of 80%
- 1.98% – Homestar Finance’s Owner Occupied P&I Fixed 1 yr 150-850k 80% (2.41% comparison rate), maximum LVR of 80%)
- 1.99% – loans.com.au’s Smart Booster Home Loan Intro 1 yr (2.47% comparison rate), maximum LVR of 80%
- 1.99% – Bank of us’ FlexiDiscount Special Fixed 1 yr 80% (2.74% comparison rate), maximum LVR of 80%)
- 1.99% – Bank of us’ FlexiDiscount Special Fixed 1 yr 90% (2.85% comparison rate), maximum LVR of 90%
- 1.99% – Bank First’s Premier Package Home Loan O/O P&I Fixed 3 yrs <80% (3.10% comparison rate), maximum LVR of 80%
- 1.99% – Community First Credit Union’s Accelerator Package Home Loan P&I 2 yr Intro (3.25% comparison rate), maximum LVR of 80%
- 1.99% – Community First Credit Union’s Accelerator Packaged Fixed P&I 2 yr Fixed Special Offer (3.25% comparison rate), maximum LVR of 80%
- 1.99% – Greater Bank’s Great Rate Fixed 1 yr (3.52% comparison rate), maximum LVR of 90%
- 1.99% – Greater Bank’s Great Rate Discount Fixed 1 yr $150k+ (3.52% comparison rate), maximum LVR of 80%
- 1.99% – Greater Bank’s Ultimate Fixed 1 yr (3.74% comparison rate), maximum LVR of 90%
- 1.99% – Greater Bank’s Ultimate Discount Fixed 1 yr $150k+ (3.74% comparison rate), maximum LVR of 80%
Source: www.canstar.com.au – 14/09/2020. Based on home loans on Canstar’s database available for a loan amount of $400,000. Comparison rate calculated based on a loan amount of $150,000 repaid over 25 years. List sorted in ascending order by rate, followed by comparison rate.
This article was reviewed by our Sub Editor Tom Letts before it was published as part of our fact-checking process.
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The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
Up to $4,000 when you take out a IMB home loan. Minimum loan amounts and LVR restrictions apply. Offer available until further notice. See provider website for full details. Exclusions, terms and conditions apply.
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The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.