Reduce Home Loans offering variable rate to 1.89% for low-risk refinancers

The non-bank lender Reduce Home Loans has introduced a new market leading variable rate of 1.89% for low-risk refinancers.

The refinancers will be deemed low-risk if they have a 40 per cent deposit.

The Rate Cutter variable rate has a maximum loan size of $850,000, with the loan available for 60 per cent LVR.

There will no no offset account, but a full redraw facility.

The sub two per cent loan takes the number of home loan rates below two per cent to 13, according to comparison site Canstar.

Canstar say that switching from the average variable rate, which their figures say is 3.35 per cent, to the new low variable rate of 1.89 per cent, would save someone around $3,672 in repayments each year and $110,261 in interest over the life of the loan.

This is based on a $400,000 loan size, 30 year loan term and 60% Loan to Value Ratio (ie. 40% deposit). 

Canstar’s group executive of financial services Steve Mickenbecker said Reduce Home Loans’ new product was primed for refinancers with equity in their home and who haven’t been financially impacted by the pandemic.  

“Reduce Home Loans’ new variable Rate Cutter loan at 1.89% represents a new low for the home loan market,” Mickenbecker said.

“This comes on the back of a wave of rate reductions over the past few months as 12 owner occupied rates have fallen below 2%. 

“With a maximum loan to value ratio of 60%, the loan is clearly aimed at refinancers and shows the appetite lenders have for low risk lending in this environment. 

“The home loan market is ripe for refinancers who have strong equity in their property and have weathered the COVID-19 storm in sound financial shape.”