It’s a race to the bottom that lenders are happy to be associated with and in great news for borrowers, Greater Bank has just claimed the new lowest home rate in Australia at 1.69 per cent, fixed for one year.
Finance comparison site RateCity.com.au confirmed the news but said borrowers would need to shop around at the end of the fixed period, warning that the home loan reverted to a 3.66 per cent variable rate after the first 12 months.
Analysis from RateCity.com.au shows that an owner-occupier with a $400,000 home loan could potentially save $5309, including refinancing costs, in the first year if they switched from the average existing owner-occupier rate of 3.05 per cent to the new Greater Bank rate.
But they also added that borrowers could end up $3849 worse off over a five-year period if they failed to switch or re-fix their loan.
According to data from the comparison site, 24 lenders have cut 317 home loan rates since January 1 and RateCity.com.au’s research director Sally Tindall said although momentum had slowed, some low-cost lenders were continuing to drop their rates in effort to attract new customers.
“Other low-cost lenders could challenge this rate in the coming months as they battle it out for the coveted title of Australia’s lowest rate mortgage,” Ms Tindall said.
“At 1.69 per cent this is the lowest home loan rate we’ve ever seen, but it’s important to remember that it only lasts for one year.”
She said although the revert rate was more than double the current fixed rate, canny borrowers could still end up better off if they renegotiated or refinanced their loan after the first year.
“If you do decide to take up a fixed rate, diarise the end date and make sure you canvas your options before it expires,” she said.
Greater Bank’s home loans are only available for customers in NSW, ACT and Queensland.
