New mortgage-holders can now get rates for below 2 per cent, as authorised deposit-taking institutions fight for new business.
According to comparison site Canstar, the official home loan rate offered by Tasmanian-owned Bank of Us is introducing one-, two- and three-year fixed home loan rates at 1.99 per cent.
Canstar’s finance expert, Steve Mickenbecker, believes the savings on offer for home owners are the biggest that have been seen yet.
“Bank of Us has come from nowhere in the rate race to now be the market leader at 1.99 per cent, having cut rates by 0.60 per cent for one- and two-year fixed rates and 1.14 per cent for three-year fixed,” Mr Mickenbecker said.
Mr Mickenbecker explained that investors could potentially save six figures on their loan due to the new rates.
“Switching from the average variable rate of 3.47 per cent to a 1.99 per cent fixed rate on an average $400,000 loan can put $313 per month or over $3,700 a year back in borrowers wallets,” Mr Mickenbecker said.
Canstar explained that over the life of a loan, the average variable rate of 3.47 per cent would see a home owner pay $244,215 in interest, while swapping to a rate of 1.99 per cent means they only pay $131,532 in interest.
“The difference a rate below 2 per cent can make is huge,” Mr Mickenbecker said.
While highlighting the offer is only for fixed interest rates, the finance expert questioned how long it would take for variable rates to follow.