A 1.75% fixed rate home loan hits the market, but how long will it last?
UBank has made big cuts to its fixed mortgage rates – borrowers could save thousands.
Online lender UBank today lowered its fixed home loan rates on its UHomeloan fixed-rate products. UBank's 3-year fixed loan for owner occupiers (with principal and interest repayments) is now just 1.75%.
That's as low as you can get. But borrowers only have until 26 February 2021 to lock in this low rate.
Aside from the low rate, there's no real catch. Fees on the loan are also low. You do need to settle your home loan within three months of applying, so new home buyers with long settlement periods might not be able to secure the rate.
UBank confirmed that the new rates are available for new borrowers, not existing customers. But this is normal because fixed-rate loans, by definition, don't change during the fixed period. Customers currently applying for a fixed-rate loan with UBank will also benefit from the new rates.
While 1.75% is the lowest rate, the lender is cutting most of its fixed rates, including interest-only loans and loans for investors. Here's the full list:
|1 Year (Owner Occupied P&I)||1.99%|
|1 Year (Owner Occupied Interest Only)||2.14%|
|3 Year (Owner Occupied P&I)||1.75%|
|3 Year (Owner Occupied Interest Only)||2.09%|
|5 Year (Owner Occupied P&I)||2.24%|
|5 Year (Owner Occupied Interest Only)||2.39%|
|1 Year (Investor P&I)||2.14%|
|1 Year (Investor Interest Only)||2.29%|
|3 Year (Investor P&I)||2.09%|
|3 Year (Investor Interest Only)||2.24%|
|5 Year (Investor P&I)||2.49%|
|5 Year (Investor Interest Only)||2.64%|
While the 1.75% rate is offered for a limited time, the lender's other rates have no end date.
Getting a lower interest rate can save you a lot of money by making your repayments lower. The average Finder app user with a home loan has an interest rate of 3.30%. That's much higher than 1.75%.
Let's say you borrowed $500,000 over 30 years. Your monthly repayments would look very different with a 3.30% rate versus a 1.75% rate.
- Repayments at 3.30%: $2,189
- Repayments at 1.75%: $1,786
The 1.75% rate in this scenario would save you $403 a month. Of course, this is just a hypothetical example and doesn't take into account fees or the fact that a fixed interest rate will likely rise once the fixed period ends.
Interest rates across the market have never been lower
While this is the lowest rate on offer at the moment, home loan rates across the market are at record lows now. So even if UBank's products aren't for you, there's never been a better time to compare and find a better deal on your loan. This is true whether you're getting your first home loan or refinancing an existing loan.