At a time that was difficult for so many businesses, Reduce Home Loans managed to have a good year. Reduce, which has been around since 2009, is strong in home lending and has the most competitive offerings in the variable and fixed home loan space.
Reduce Home Loans’ stated mission is to “revolutionise and disrupt the Australian home loan space”. Reduce CEO Josh Beitz says: “Our commitment is to drive interest rates as low as possible and help Aussies get their mortgage off their back sooner.”
Its variable home loans currently start at 1.99%pa and Reduce also offers $5000 cashbacks on purchases and refinances.
Business has been strong for Reduce over the past year; it was busier than normal with the number of enquiries increasing.
“Our clients who had been thinking about refinancing, even for more than a year or two, probably finally decided to at least make an enquiry to see how much they could save. The majority of customers who refinanced said they wished they’d done it a lot sooner,” says Beitz.
“We were lucky because we’re an online home loan provider, and in essence it didn’t really change much for us. We had to have everyone working from home to be safe, but we were already a digital provider.
“The business flourished because what we found was that while some people were doing it tough, other people were looking to save as much money as they could and one of the best ways to save was to look at refinancing and get a much lower rate. We were able to save the average refinancing client over $260 a month.”
Reduce is able to keep its rates low by getting its funders to compete for a client’s business.
Reduce sources wholesale funding from institutional investors and wholesale banks, cutting out the “middle man” to deliver loans at the lowest possible price both in terms of interest and fees.
Currently its Super Saver 60 (for those with loan-to-value ratio of up to 60) is 1.77%pa variable. For an 80% LVR, the variable rate is 1.99%.
“Essentially, what we do is we get the wholesale funders to compete and by doing that we continually drive interest rates lower and continue to be able to have some of the sharpest rates in the market,” says Beitz.
“We also have cashback offers, some sharp fixed-rate offers and sharp variable rate offers. We follow market trends and look at what clients are wanting and adapt our home loan range to suit what our clients want.”
In second place, Freedom Lend has particularly competitive offerings for LVRs of 90% in the variable home loan space and up to 95% in fixed home loans.
Third placegetter loans.com.au is also strong in fixed terms, with three-year loans starting at 2.70%pa, with a popular referral bonus program called Smart Friends.