As the home loan rate war rages on, leading low rate lender, Reduce Home Loans, has broken records yet again, with a 1.89 per cent variable rate.
The Rate Cutter Variable home loan from Reduce Home Loans comes with a 1.89 per cent interest rate (1.92 comparison rate), with a maximum loan amount of $1 million to qualify. It is available for borrowers with loan-to-value ratios of up to 60 per cent.
It’s not designed for new customers – instead it is suited for refinancers looking to chip away at their mortgage. Customers will be able to take advantage of unlimited extra repayments, as well as a full redraw facility, to help Aussie households pay down their home loan debt with ease.
We’re all in this together
Times are tougher than ever for Australian households, and it’s no secret that your mortgage repayments are your biggest ongoing expense.
As households turn inwards due to lockdown restrictions, reducing this expense via refinancing has been at the forefront of the minds of many Australian households during the Coronavirus pandemic.
Australian Bureau of Statistics (ABS) figures found that from April to May, the number of refinancers grew by 30 per cent month-on-month. While that number fell by 12 per cent from June to July, the value of refinancing has still increased by 39 per cent year-on-year.
In fact, over $53 billion in home loan values have been refinanced in the past six months. And it’s understandable why so many Aussies are considering refinancing this year, with historically low rates on offer from leading, low rate lenders, like Reduce Home Loans.
This new 1.89 per cent interest rate is designed to help homeowners reduce their repayments during Australia’s first recession in decades.
In fact, the average owner-occupier – based on the Reserve Bank of Australia’s latest lending rates – that switched from an interest rate of 3.22 per cent to 1.89 per cent may save $235 in just one month. In a year, the average owner-occupier may save almost $3,000 in repayments over a year.
This may be the equivalent of taking the family on a holiday or buying a new appliance.
Repayment savings on a $350,000 mortgage: Average vs. Reduce
|Interest rate||Monthly repayments||Repayments over 1 year|
|Rate Cutter Variable loan||1.89%||$1,465||$17,580|
|Avg. owner-occupier loan||3.22%||$1,700||$20,400|
Note – Based on RBA Housing Lending Rates August 2020. Calculations based on $350,000 home loan with 25-years remaining, does not factor in fees.
How to calculate your own savings
If you’re considering refinancing to the Rate Cutter Variable 1.89 per cent home loan, you can calculate your potential repayment savings right now.
Reduce Home Loans offers a range of calculators to help existing homeowners and aspiring borrowers, including a mortgage repayment calculator.
It’s as simple as filling out your current loan information, including loan amount, loan term, current interest rate and repayment frequency.
For example, let’s compare the Rate Cutter Variable 1.89 per cent interest rate with some of the offers from the big four banks.
Borrowers refinancing from the big four banks lowest ongoing variable rates to Reduce Home Loan’s new lowest rate may also potentially save hundreds of dollars a month, or thousands in one year.
In a time when every dollar counts, the potential monthly savings alone may offer a lifeline for Aussie households.
Repayment savings on a $350,000 mortgage: Big four banks vs. Reduce
|Interest rate||Monthly repayments||Savings||Repayments over 1 year||Savings|
|Rate Cutter Variable loan||1.89%||$1,465||/||$17,580||/|
|CBA lowest ongoing variable rate||2.79%||$1,622||$157||$19,464||$1,884|
|Westpac lowest ongoing variable rate||2.69%||$1,604||$139||$19,248||$1,668|
|NAB lowest ongoing variable rate||2.69%||$1,604||$139||$19,248||$1,668|
|ANZ lowest ongoing variable rate||2.72%||$1,609||$144||$19,308||$1,728|
Note – Interest rates accurate as of 17.09.2020. Calculations based on $350,000 home loan with 25-years remaining, does not factor in fees.