Time to compare your interest rate? Outstanding Value home loans for 2019 revealed

Do you have a competitive interest rate on your home loan? We reveal a number of institutions that provided outstanding value to their customers in 2019. 

Interest rate cuts have dominated lenders’ movements recently. Canstar’s Group Executive of Financial Services Steve Mickenbecker said decreases in home loan interest rates outnumbered increases by two-to-one in February. With that in mind, it could be a good time to check your home loan and compare to see if you could get a better deal.

Canstar’s Research team has crunched the numbers to determine which lenders offer outstanding value in terms of price and features to their customers. They considered a total of 4,871 home loans in the latest Home Loans Star Ratings. Once Canstar’s eligibility criteria were applied, 3,209 products from 92 home loan providers were analysed and rated.

Canstar awarded 26 home loan lenders with an overall 5-Star Rating after they were found to offer outstanding value for the following types of borrowers:

  • Owner-occupier: An individual either refinancing an existing property, purchasing a new property or constructing a new property.
  • Investor: An individual either refinancing an existing investment property or purchasing an investment property.
  • Line of credit: An individual who borrows credit against their property as security.

The lenders recognised as offering outstanding value to customers in the Home Loan Star Ratings are listed below.

Owner-Occupier Home Loan Star Ratings

Outstanding Value – Home Lender

Outstanding Value – Home Lender

This award goes to home loan lenders that provided outstanding value products to owner-occupiers across variable and fixed-rate loan terms considered in these ratings. Home loans were assessed across four loan amounts ranging from $200,000 up to $750,000, for borrowers making principal and interest repayments. Here are the winners, listed in alphabetical order:

Canstar Research found owner-occupiers with a 5-Star home loan had access to lower interest rates compared to the market average, as displayed in the table below.

Home Lender Award
Loan Type Minimum Rate Maximum Rate Average 5-Star Rate Average Market Rate
Variable 3.44% 6.18% 3.68% 4.47%
1 Year Fixed 3.49% 5.16% 3.67% 4.16%
2 Year Fixed 3.49% 4.95% 3.73% 4.11%
3 Year Fixed 3.74% 5.05% 3.83% 4.19%
5 Year Fixed 3.93% 5.35% 4.09% 4.62%

Current as at March 2019. Based on $350,000 loan amount at 80% loan-to-value ratio (LVR) with principal and interest payments.  All products assessed in the Canstar 2019 Home Loan Star Rating have been considered. ‘Average Market Rate’ refers to the average interest rate of all applicable loans in our database.

Outstanding Value – Variable Home Lender

This award recognises lenders that consistently offered outstanding value products to owner-occupiers across varying loan amounts. Home loans were assessed across four loan amounts ranging from $200,000 up to $750,000 for borrowers making principal and interest repayments. Here are the winners, listed in alphabetical order:

  • AMO Group
  • Easy Street Financial Services
  • Freedom Lend
  • Homestar Finance
  • HSBC
  • MOVE Bank
  • Pacific Mortgage Group
  • Reduce Home Loans
  • SCU

The research shows owner-occupiers who choose a 5-Star Rated home loan have the potential to save themselves thousands of dollars over the life of the loan. For instance, the average variable interest rate for a 5-Star Rated residential loan valued at $350,000 with an 80% loan-to-value ratio (LVR) and principal and interest repayments was 3.68%. This compares favourably to the market average of 4.47% out of all products on Canstar’s database. Over a 25-year loan term, that difference could equate to more than $50,000 in savings on the total cost of the loan.

Outstanding Value – Fixed Home Lender

This award recognises home loan lenders that consistently provided outstanding value products to owner-occupiers across one, two, three and five-year fixed rate loan terms. Home loans were assessed across four loan amounts ranging from $200,000 up to $750,000 for borrowers making principal and interest repayments. Here are the winners, listed in alphabetical order:

  • BankVic
  • Freedom Lend
  • Greater Bank
  • ING
  • Newcastle Permanent
  • Qudos Bank
  • RACQ Bank
  • TicToc Home Loans
  • UBank

Borrowers looking to fix their home loan for a set period may want to consider the difference in interest rates between a 5-Star Rated loan and the market average. For example, the average 5-Star three-year fixed interest rate for a residential loan valued at $350,000 with an 80% LVR and principal and interest repayments was 3.83%, compared to the average from our database of 4.19%.

Investment Home Loan Star Ratings

Outstanding Value – Investment Home Lender

Outstanding Value – Investment Home Lender

This award acknowledges lenders that consistently offered outstanding value products to investors across the variable and fixed-rate loan terms considered in these ratings. Home loans were assessed across four loan amounts ranging from $200,000 up to $750,000 for borrowers making principal and interest and interest-only repayments. Here are the winners, listed in alphabetical order:

  • Freedom Lend
  • Greater Bank
  • Homestar Finance
  • loans.com.au
  • Newcastle Permanent
  • RACQ Bank
  • TicToc Home Loans
  • Virgin Money
  • Reduce Home Loans
  • Suncorp Bank

The research revealed 5-Star Rated home loans offer investors lower interest rates when compared to the market average within the investor home lender profile.

Investment Home Lender Award
Loan Type Minimum Rate Maximum Rate Average 5-Star Rate Average Market Rate
Variable Interest Only (I/O) 3.99% 6.78% 4.25% 5.08%
Variable Principal and Interest (P&I) 3.75% 6.70% 3.98% 4.77%
1 Year Fixed I/O 3.90% 5.49% 4.15% 4.52%
1 Year Fixed P&I 3.84% 5.17% 3.97% 4.31%
2 Year Fixed I/O 3.90% 5.49% 4.15% 4.52%
2 Year Fixed P&I 3.89% 5.25% 3.96% 4.24%
3 Year Fixed I/O 4.02% 5.49% 4.11% 4.53%
3 Year Fixed P&I 3.88% 5.35% 4.01% 4.32%
5 Year Fixed I/O 4.29% 5.90% 4.52% 5.01%
5 Year Fixed P&I 4.28% 5.61% 4.41% 4.76%

Current as at March 2019.  Based on $350,000 loan amount at 80% loan-to-value ratio (LVR) with principal and interest and interest-only payments.  All products assessed in the Canstar 2019 Home Loan Star Rating have been considered. Average Market Rate’ refers to the average interest rate of all applicable loans in our database.

Outstanding Value – Investment Variable Home Lender

This award goes to home loan providers that consistently offer outstanding value products to investors across variable loans. Home loans were assessed across four loan amounts ranging from $200,000 up to $750,000 for borrowers making principal and interest and interest-only repayments. Here are the winners, listed in alphabetical order:

  • Freedom Lend
  • Gateway Bank
  • Homestar Finance
  • loans.com.au
  • Newcastle Permanent
  • Pacific Mortgage Group
  • RACQ Bank
  • Reduce Home Loans
  • State Custodians
  • Community First Credit Union

The research revealed there were potential savings to be found for investors if they chose a 5-Star Rated home loan. For instance, the average 5-Star variable interest rate for an investment loan valued at $350,000 with an 80% LVR and principal and interest repayments was 4.25%, while the interest-only rate was 3.98%. These average rates compare favourably to the market averages from our database of 5.08% and 4.77%, respectively. These differences can potentially add up to be quite significant over time. For example, over a 25-year loan term, that difference means investors making principal and interest repayments could save more than $51,000 on the total cost of the loan.

Outstanding Value – Investment Fixed Home Lender

This award recognised lenders that consistently provided outstanding product offerings to investors across one, two, three and five-year fixed rate loan terms. Home loans were assessed across four loan amounts ranging from $200,000 up to $750,000 for borrowers making principal and interest and interest-only repayments. Here are the winners, listed in alphabetical order:

  • Aussie
  • Freedom Lend
  • Greater Bank
  • Newcastle Permanent
  • RACQ Bank
  • Suncorp Bank
  • TicToc Home Loans
  • Virgin Money

For borrowers looking to fix their investment home loan, the difference in interest rates between a 5-Star Rated loan and the market average can be significant. For instance, the average 5-Star three-year fixed interest rate for an investment loan valued at $350,000 with an 80% LVR and principal and interest repayments was 4.01%, while the interest-only rate was 4.11%, compared to averages from our database of 4.32% and 4.53% respectively.

Line of Credit Star Ratings

Outstanding Value – Line of Credit

Outstanding Value – Line of Credit

Canstar’s Research team compared the price and features of 48 lending institutions that provided a line of credit secured by a property. Here are the winners, listed in alphabetical order:

  • Aussie
  • BankVic
  • Suncorp Bank
  • State Custodians

Canstar’s Home Loan Star Ratings are conducted twice per year. For more information about the 2019 Home Loan Star Ratings and how they are calculated, please view the ratings methodology.

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