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Home loan rates hit new record low of 1.99%

Bank of Us has announced the record-breaking rate of 1.99 per cent, fixed for 1 to 3 years, for owner-occupiers paying principal and interest repayments with a deposit of 10 per cent or more. The rate is exclusive to residents of Tasmania.

Bank of Us flexi discount special (as of 30 June 2020)

Loan termFixed rateComparison rate
1 year fixed1.99%2.78%
2 year fixed1.99%2.71%
3 year fixed1.99%2.64%

RateCity.com.au analysis shows if an owner occupier with a $400,000 home loan switched from the average variable rate of 3.27 per cent to this new low fixed rate, they would save over $4,700 in the first year. This assumes they have 25 years remaining and are paying principal and interest.

Sally Tindall, research director at RateCity.com.au, said it was the start of a new era for home loans in Australia.

“From tomorrow, the average Australian who lives in their own home can apply for a mortgage rate that starts with a one,” she said.

“This is game on for homeowners looking to fix. We expect more low-cost lenders to follow suit with rates under 2 per cent.

“At this stage, the big four banks are unlikely to chase them down, but if they start losing customers to the smaller lenders, they might be forced to cut fixed rates again.

“Even a year ago, nobody expected rates would fall this low. But these are extraordinary times and lenders are responding with extraordinary rates,” she said.

Lowest 2-year fixed rates on RateCity.com.au

LenderFixed rateComparison rate
Bank of Us1.99%2.71%
Homestar Finance2.06%2.49%
HSBC2.09%2.98%

Lowest 3-year fixed rates on RateCity.com.au

LenderFixed rateComparison rate
Bank of Us1.99%2.64%
BCU2.16%3.63%
St George2.19%3.33%

Lowest 5-year fixed rates on RateCity.com.au

LenderFixed rateComparison rate
RACQ2.49%3.76%
UBank2.59%2.91%
ING2.59%3.52%

Big Four Bank lowest rates

LenderAdvertised variableAdvertised
2-yr fixed
Advertised
3-yr fixed
CBA2.79%2.29%2.29%
Westpac2.69%2.19%2.19%
NAB2.69%2.19%2.29%
ANZ2.72%2.29%2.29%

* Westpac’s lowest rates are for borrowers with an LVR of 70% or less.

Note the above rates are for owner occupiers paying principal and interest. Some loan to value restrictions may apply. Note Bank Australia has fixed rates under 2 per cent for people with new or near-new homes with a NatHERS rating of 7 stars or higher.

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