Australia’s lenders keep undercutting each other as the battle to see who can offer the lowest mortgage rates rages on. Now Homestar Finance is offering the lowest two-year fixed rate in the market.
Homestar Finance cut its two-year fixed owner-occupier rate by 14 basis points to 1.74%, according to The Australian. That knocks Westpac from the top spot after it offered the lowest rate among the big four banks last week.
A mortgage owner with Homestar’s new rate on a loan balance of $400,000 would pay $2,832 less in interest than with the market’s average two-year fixed rate, according to RateCity.
The increase in rate competition was a win for lenders, RateCity research director Sally Tindall told The Australian.
“This loan is the lowest two-year fixed rate on the market and also the lowest overall home loan rate available nationally,” Tindall said. “It also has one of the most competitive revert rates at 2.24%.”
Fixed rates have plummeted since the onset of the COVID-19 pandemic, cheapening the cost of debt. Those lower rates, combined with federal and state assistance policies like HomeBuilder, have sent demand for housing skyrocketing.
Over the past two months, 450 fixed rates have been slashed across the mortgage market. However, Commonwealth Bank – the nation’s largest lender – has yet to move on rates this year, Tindall told The Australian.
Read more: Westpac cuts mortgage rates even lower
“CBA is the only big bank not to cut any fixed home loan rates this year,” Tindall said. “The pressure’s now on Australia’s biggest bank to rethink its rates or risk losing customers to the others.”
Homestar is also tied with Reduce Home Loans for the lowest variable rate at 1.79%.
Greater Bank has the lowest fixed rate in the market, with its one-year fixed rate sitting at 1.69%. However, that rate is only available to customers in New South Wales, Queensland and the Australian Capital Territory.