Fifty lenders have 126 home loans under 2 per cent, according to RateCity
The number of lenders offering home loans of under 2 per cent has skyrocketed.
Interest rates loans have never been lower and Australians can pay less than $50 a day on the average home loan, according to a leading financial comparison website.
RateCity.com.au found 50 lenders now offering a total of 126 home loans under 2 per cent, which equates to 40 per cent of the lenders on its database having at least one home loan rate starting with a ‘1’.
However, a month ago they were hard to find. There were 11 lenders with rates under 2 per cent right before the Reserve Bank of Australia trimmed the official cash rate on November 3. Since then, the list has more than quadrupled.
RateCity.com.au research director Sally Tindall said home loan rates under 2 per cent were becoming the new norm.
“At the start of this month a rate under 2 per cent was as rare as hens’ teeth. Today there’s well over 100 of them,” she said.
“On a $400,000, 30-year mortgage, a loan under 2 per cent costs less than $49 a day, even when paying down both principal and interest.
“Record low interest rates have supercharged people’s borrowing power. As a result, some first home buyers are finally finding themselves in contention at open homes and auctions.”
With rates at under 2 per cent, borrowers are paying less than $91 a day for loans of $750,000 and $122 a day when they borrow $1m.
Borrowers paying 1.77 per cent on a $400,000 loan are saving $12 a day compared to two years ago when the lowest rate was 3.44 per cent, according to RateCity.com.au.
The latest ABS lending finance figures show there was a 51 per cent increase in the number of first homebuyer loans over the last year in original terms.
“The formula of record low rates and government grants seems to have hit the sweet spot for many first home buyers. They’re finally enjoying their time in the sun,” Ms Tindall said.
“Two years ago, the lowest variable rate was 3.44 per cent. Today it’s 1.77 per cent and it’s not just the low-cost lenders that have moved. The whole market has been forced to follow behind them.
“Just last year, owner occupiers with a rate in the threes probably thought they had a cracking deal. Today, you’d be pretty mortified with that.”
Super funds flex political muscle with UK reform push
A group of Australian industry funds has teamed up with British pension funds to push for vital reforms to make it easier to invest in the UK’s net zero transition.
Savers will pay the price once RBA cuts rates, says Morgan Stanley
Major lenders will cut their rates on savings accounts to prop up their margins once the Reserve Bank begins to cut interest rates, Morgan Stanley predicts.