Reduce Home Loans breaks records with the cheapest home loan rate in Australia

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
Difference -1.33% $235 $2,820

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.

(29)    For the Rate Cutter Variable where the borrower pays $1170 upfront fees then a corresponding loyalty discount of 0.10% p.a. off the Rate Cutter Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(27)    For the Investor Rate Slasher Cash Back Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Investor Rate Slasher Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(26)    For the Low Rider Cash Back Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Low Rider Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(25)    For the Economizer Cash Back Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Economizer Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(24)    For the Super Saver Cash Back Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.10% p.a. off the Super Saver Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(23)    For the Super Saver Variable where the borrower pays an upfront fee of $1170 then a corresponding loyalty discount of 0.15% p.a. off the Super Saver Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(22)    For the Economizer Variable where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.11% p.a. off the Economizer Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(21)    For the Investor Cash Back Hero Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Cash Back Hero Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(18)    For the Home Owners Dream 1 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(20)    For the Cash Back Hero Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Cash Back Hero Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(14)   For the Investor Rate Slasher where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.09% p.a. off the Investor Rate Slasher rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(12)   For the Investor Rate Lovers Interest Only where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.07% p.a. off the Investor Rate Lovers Interest Only rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(11)   For the Wealth Maximizer 3 year fixed Principal & Interest where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Wealth Maximizer reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(10)    For the Wealth Maximizer 2 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Wealth Maximizer reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(9)    For the Home Owners Dream 3 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(8)    For the Home Owners Dream 2 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(7)    For the Investor Rate Slasher where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.09% p.a. off the Investor Rate Slasher rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(6)    For the Investor Rate Buster Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Investor Rate Buster Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(5)    For the Rate Buster Variable where the borrower pays an upfront fee of $150 then a corresponding loyalty discount of 0.05% p.a. off the Rate Buster Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(4)For the Rate Slasher Variable where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.08% p.a. off the Rate Slasher Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(3) For the Investor Rate Lovers Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Investor Rate Lovers Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(2)For the Rate Lovers Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Rate Lovers Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(1) For the Low Rider Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Low Rider Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(28) For the Rate Crusher 1 Year Fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.05% p.a. off the Rate Crusher reverted variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(19) For the 1 Year Fixed Wealth Maximizer where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the 1 Year Fixed Wealth Maximizer reverted variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.