A second record low 1.99% home loan has arrived

A second record low 1.99% home loan has arrived
A second record low 1.99% home loan has arrived

Lender loans.com.au has introduced a record low discounted variable rate of 1.99%, available for one year before it reverts to 2.57%.

The move comes less than one month after Tasmanian customer owned bank, Bank of Us introduced fixed rates of 1.99%.

With loans.com.au’s new lowest variable rate of 1.99% only available for one year, Canstar has compared the interest paid over the 30 year life of the loan between the new offer and the current lowest variable rate of 2.19%.

The analysis reveals that taking out the introductory offer of 1.99% would see borrowers with lower monthly repayments for 12 months though it will cost $25,517 more in interest over the life of the loan (assuming the rate differential stays the same). 

A second record low 1.99% home loan has arrived

Canstar's finance expert, Steve Mickenbecker said,“just last month we saw fixed rates crack the 2% barrier, with variable rates now following suit, albeit with an introductory rate that moves higher after 12 months.”

“The four minute mile of home loans, a rate below 2%, was broken last month and with the barrier broken we are now seeing fast followers.

“We saw how quickly the competition moved below 3% once that record fell, so a rate below 2% could soon become the qualifying rate to be competitive.

“A rate below 2% could make a big difference to homeowners’ hip pockets each month, but borrowers have to be prepared for a higher monthly repayment when the 12 month introductory period expires, even though the ongoing rate is competitive.

“Switching from the average variable rate of 3.44% to a rate of 1.99% on an average $400,000 loan could put $307 per month or over $3,600 back into borrowers wallets in just the first year,” he concluded.

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