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Australia’s variable rate hits new record low

An online lender has become the new leader in the mortgage rate wars as variable home loan rates continue to drop, hitting a new record low.

Freedom Lend is now offering a variable rate of 2.17 per cent, for new customers with a deposit of 30 per cent of more. Research Director Sally Tindall said home loan rates have continued to drop despite no official change to the cash rate and the database shows 15 lenders have cut more than 50 variable home loan rates for new customers in the past month.

“The fight is on between the non-bank lenders to have the lowest variable rate in Australia,” Ms Tindall said.

“Today, Freedom Lend has upped the ante in a home loan rate war that refuses to cool down.

“Over the last couple of months, smaller providers have had to chip away at their rates in order to stay ahead of the big banks.”

Ms Tindall said that just three months ago, the lowest variable rate was 2.44 per cent. Since then it has dropped 27 basis points.

“With the number of new home loans on the decline, lenders desperately need new business so they’re looking to refinancers to make up the difference,” she explained.

“The recent increase in refinancing activity suggests rock-bottom rates are prompting people to switch to take advantage of the relentless market competition.”

Notes: above rates are for owner occupiers paying principal and interest. LVR restrictions apply. Westpac, Freedom Lend and Pacific Mortgage Group require a loan-to-value ratio (LVR) of 70%, Homestar Finance requires a 60% LVR. All other loans listed require an LVR of 80% or more.

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