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Mortgage interest rates hit new low – what’s the catch?


A Big Four bank has slashed up to 0.90% off its variable rate home loans, bringing mortgage interest rates down to new lows. But what's the catch?

ANZ changed its package rate discount structure on April 19, bringing the new rate on its Breakfree Standard Variable loan down to 2.99%.

This translates to a cut of up to 0.90% on the bank's various home loan packages. The rate is available on principal-and-interest loans for borrowers with a 20% deposit, but the kicker for existing ANZ borrowers is that they will miss out on the discount.

Although ANZ is the first big bank to cut variable mortgage interest rates in 2021, a number of other lenders have slashed interest rates this year, with many variable rate loans available in the low 2s or even starting with a 1.

There's no doubt that interest rates on home loans are the cheapest they've ever been – but is there a catch?

Mortgage interest rates below 2% – with conditions attached

Well, there's no such thing as a free lunch, so yes, there are some conditions attached.

There's the Smart Booster Discount Home Loan from, which is a variable rate home loan priced at just 1.99%.

It's only for owner-occupiers (not investors) and has principal-and-interest repayments. The catch: this loan comes with a discounted variable introductory interest rate. After the initial discount period, this reverts to a higher rate, which is currently 2.48%.

Or you could look at the low rate home loan with offset on offer from

This one is available for both investors and owner-occupiers, and you can choose from interest-only or principal-and-interest loans. The interest rate for owner-occupiers is just 2.14%, which is super sharp for investors – BUT you need a 40% deposit to qualify.

Just to put that in perspective, based on current median property values, you'd need a whopping big deposit to get this loan:

CityMedian dwelling price (April 2021, CoreLogic)40% home loan deposit

Cheapest home loan offers – ever

As with all things related to home loans, the devil is in the detail, but the bottom line is that right now you have the opportunity to secure some of the cheapest home loan offers that have ever been offered.

Yes, there might be some restrictions. Some lenders will want to see bigger deposits or will offer cheaper deals for principal-and-interest loans than they do for interest-only loans.

Overall, though, there are big savings on offer across the board. Some fixed rate home loans are available right now from just 1.75%. If you're currently paying 3% with a $600,000 mortgage, refinancing to a cheap fixed rate loan of 1.75% could save you the following:

  • $89 per week
  • $387 per month
  • $4,644 per year

Use this 10-second calculation to work out how much you could save by refinancing.

If, like me, you're an ANZ home loan customer, you might be a bit miffed that the bank has discounted mortgage interest rates for new customers but left us existing customers paying the full rate.

If you're an existing ANZ customer and you want in on these rate cuts, what can you do? Pick up the phone and ask them what they can do for you. You'd be surprised how often a bank or lender is willing to negotiate with you and offer a cheaper rate in order to keep you as a customer.

And if they don't? There are plenty of great deals out there if you refinance, so it might be time to consider making the switch. It's easier than you think and could save you thousands of dollars.

If you haven't looked at your mortgage interest rate in the last 12 months, it's time to check in. Compare the latest home loan offers and see if you qualify for a cashback deal

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