Ubank are reducing their P&I variable rate to 2.49% on 17 July
https://www.ubank.com.au/julyratecut
Fixed rates:
Fixed rates start from 2.14% and they are also waiving the rate locking fee of $395 until 30 Sept.
UBank Home Loan Interest Rate 2.49% Variable Rate (Fixed Rates from 2.14%)
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Fixed rate of 2.14% is great too
From ubank:
Effective from 8 July 2020, UHomeLoan 1 and 3-year Fixed Rates reduced by 0.15% p.a. and we’re waiving the Rate Lock Fee of $395 for all new fixed rate loans that settle on or before 30 September 2020.
Sounds like UBank are expecting rates to go down even further.
Sounds like they all might be!
Yes especially when they're also waiving the $395 Rate Lock Fee which bumped the comparison rate quite a bit.
Another factor that bumps up the Comparison Rate is rate that applies once the Fixed Rate period expires. UBank and possibly other banks as well, charge a Variable Rate higher than their normally advertised rate.
Does this announcement lower their 3-year fixed rate to 1.99% (0.15% discount from their current rate of 2.14%)? Or is 2.14% the already reduced rate? I just notice they talk about dropping their variable rate by .10% to 2.49% and their current advertised variable rate is 2.59%.
https://www.ubank.com.au/newsfeed/articles/2020/07/rate-chan…
Also it should drop the comparison rate 2.59% pa down considerably as well given they are waiving the $395 rate lock fee.
Wow - probably one of the best rates from the major lenders if this is correct.
they say they already reduced the fixed rates 3 days ago to 2.14%, so I dont think they will drop further for a while
Thanks.. you're quite right! I read that too fast.
"Effective from 8 July 2020, UHomeLoan 1 and 3-year Fixed Rates reduced by 0.15% p.a. "
anything about offset account?
No offset with ubank.
No offset no deal
macquaire bank's rate is 2.59% for offset (<60% LVR) which is not bad
I'm a current variable rate customer. It's true there is no offset, but there is something similar.
You can repay any amount into the account (I've had my total loan down to $1000 before).
You can also withdraw any early repayment.
It's actually better than offset as it's not limited in amount and theres no "offset account" fee. Takes roughly 24 hours for money to go in or out.
An offset account has tax benefits that a redraw facility cannot benefit from. Always get an offset unless you're 100% sure you'll never use your house as an investment property
Ah, was not thinking of investment prop. However you may refinance when the time comes?
@killingtime: You lose all tax benefits of anything already paid into the loan and taken out again, so refinancing wouldn't make a difference
@killingtime: Not just an investment property.
As an example, if you have a PPOR which you later decide to change into investment, you simply move your offset to a different property (the one with tax advantages). All done in a single bank transfer.
Redrawn funds used to invest in income producing assets is 100% tax deductible. You can use redraw for debt recycling.
If you intend to use your PPOR as an investment property in the future it would be wise to use an Offset though.
I think interest rate for offset account is always higher than redraw only. I maybe wrong though.
@spedohero: Depends on the bank, many of them it makes no difference. Some others do have higher rates for accounts with offsets.
Any literature I can use to learn more about these tax benefits?
@freewhere: Redraw - https://www.strongmoneyaustralia.com/debt-recycling-ultimate…
Offset - Look up how negative gearing works with investment properties.
Benefit over debt recycling over negative gearing is you can do it with your PPOR. Negative gearing only works with an investment property.
For existing customers too or just new customers?
"All new and existing UBank customers with variable rate home loans, including anyone in the process of applying for or settling a new variable rate UHomeLoan, will benefit from the new reduced rates."
Damn - my fixed loan settled on 12 May (2.29%). I don't suppose uBank will extend this to existing fixed loan customers too?
No, that's not what fixed means.
just read it somewhere, Reduced home loan variable rate 2.19% has no offset thou just withdraw facility
I'm a current customer. It's functionally the same thing. https://www.ubank.com.au/help#/?m=c&id=5498
Already getting fixed 3 year @ 2.24% (split loan) from a major bank with full service home loan account (and being charged no fees).
I'd suggest shopping around and taking a few basis point hit for a full service mortgage if you have a sizable balance in your offset.
Mind letting me know which major bank? We moved away from CBA in 2017 (to ING) and it's probably time to shop around again. Ubank is a no deal for us because of no offset.
I dare say you could get it with any of the 4 majors. Try the two Sydney based banks first ;)
cant imagine how many defaults are going to happen post September :/
You got that right! If you think about savings accounts best rate is 0.8% (not counting bonus honeymoon rates) and fixed / variable 2.19% - 3%. Assume 2.5%. 1.5% margin to take loans off the hands of another bank. Especially when this is a virus driven recession and vaccine date is unknown.
This is not a great rate. I'm getting 2.39% (Variable, P&I, Owner occupier) @ TicToc (https://tictoc.com.au/). $10 extra/month for off-set.
2.39% is a good rate especially if you only want a barebones loan account type. UBank rate is also decent, but 10 basis points is 10 basis points.
2.39% variable with no fees is indeed a great rate. I'm already with UBank however and it wouldn't be worth switching.
What I like about UBank's offer is they're reducing rates for everyone, not just new customers.
Same. I’ve never had to ask for my rate to be the same for new customers.
I definitely see value in that.
Yeh that is definitely better than TicToc in that department. TicToc has many tiers of customers.
How is TicToc's valuation? Generally more conservative or at par with the Big 4?
The valuation I got with TicToc was identical to the one I had from HSBC 3 months earlier.
I joined TicToc in February and am on 2.54%. I asked to be placed on the 2.39% rate but they said it’s only for new customers. Pretty poor to be honest. I’d recommend moving away from TicToc in less than 3 years after joining - see the graph in this article:
https://tictoc.com.au/home-loan-guide/how-banks-and-lenders-…My experience is different. I got moved to a 2.77% p.a. after my fixed term was finished in May 2020.
I called up asking to be matched with what's advertised on their website (2.39%), 24hrs later, they confirmed they'll match it.
When did you join?
@DrKB108: Based on the graph in my link above your interest rate would have been around 2.75% which is why they’ve moved you.
Edit: sorry saw that you wrote you were on 2.77%.
Let's face it these are unprecedented times for our lives. Interest rates will go negative within 5 years as the economy is isolated and jobkeeper slowly stops. These are unique times.
which bank offers the lowest P&I with offset currently? I want to make a move from CBA.
"Big Bank?" probably Macquarie.
Any bank.
Fixed or variable?
The Tic:Toc one at 2.39% variable with $10 a month offset fee is the best I have seen. I'm just waiting for my refinance to settle with them (already have an investment mortgage with them).
Only downside is the internet banking site is hideous (haven't actually had to use any functionality yet other than view my loan balance).
Try state custodian?
Full disclosure: Broker here and general information only.
For owner occupied, check out Adelaide Bank (2.29%pa fixed for ½ years, $15p/m fee) and Teacher's Mutual Group (2.19%pa fixed for 1-3 years, no ongoing fees).
Both have an offset account attached.Subject to fees, suitability, valuation etc.
Happy to help anyone in need.
Any bank offering decent rebate with re-financing for inv loan (fix rate or variable)? The rebate could help cover some of the break fee if one wanted to exit a fixed loan to look for a cheaper option.
It’s possible, but you usually get one or the other.
It also depends on where you live (e.g. Bankwest has a current promotion for WA residents), and how much you are looking to borrow.
Happy to discuss your specific scenario privately if you’d like.
Ta for offer. Do you ever track % non bank lenders pass on when RBA drops rates. WE are with a Building Society and they have not passed on the latest drops in full. Still in the high 3's. Owner occupier would it be worth changing lenders for around $190,000? House worth around $800,000?
I don’t track the individual banks and who passes on rate reductions for a few reasons, including the fact that variable rates can (and do) move out of the RBA cycle, and we have a panel of over 35 lenders, and tracking these is not a priority for us or our clients.
We might be different, but we don’t focus on rates as the primary factor in our assessments. Our recommendations are based on solving problems and choosing product types that support our clients’ goals. This is followed by making sure bank policies align with a client’s situation (so they get approval).
Once we have these sorted out, we present the options with the best rates.If you’re looking to move, I’d always weigh up the costs of refinancing (we allow for $750 to switch in WA) and the new fees, against the interest you’ll be saving over how long you expect to stay with the bank.
Happy to run through some numbers with you if you’d like, but I’ve found most clients will prefer to negotiate with their current lenders, than pay these costs and go through the refinance process.
Great rate. I have the following with CBA now for comparison:
- 2.19% 1-year Fixed Owner Occupied P&I
- 2.70% Standard Variable Owner Occupied P&I with offset
- 2.79% 3-year Fixed Investment Interest Only
All under 1 CBA Package. I do have large loan value though so it helps negotiating the rates.
thought CBA advertised rate is 2.29% for fixed OO P&I, did you negotiate to get it 2.19%?
Yea 2.19 fix with cba but loans needs to be over 250k. But got to ask ( bank direct or broker ) but they pretty much giving it to everyone - existing and new as they are matching nab
I may have jumped to early, fixed my loan back in April on early days of covid so the rate was around at that time was 2.29%
but loans needs to be over 250k
I didn't know loans could be that small ;)
In the age of million dollar houses, I would've thought most mortgages would be over $500k at least@1st-Amendment: Nobody comes on here to admit they got an $800k loan but what they will tell you is they make $250k+ pa.
$250k would be a small loan but anything below that I would say would be almost borderline uneconomical for banks given how low interest rates are.
I have 1 loan that is less than $250k and it is first one I pay off (socking into redraw) because it is a higher rate than my OO / fixed.
Thanks for this. It's always hard get actual rates from the majors because they advertise a higher rate, but then offer all sorts of discounts making it hard to compare actual rates. My CBA loans are:
* 3.00% Standard Variable Owner Occupied P&I with offset
* 3.48% Standard Variable Investment P&IAlso large, but looks it I'm getting a poor deal :(
I tend to stay away from fixed rates as the banks tend toknow what the market is doing so only offer lower fixed rates when they know the variable is about to drop. ie There's plenty of people out there who locked in at 4% when that sounded good that are now kicking themselves. I expect std variable to drop under 2% within the next 12 months.
I got my loan through a broker, should I ask him about reductions or go straight to the bank?
Variable under 2%? Good luck with that
It's not luck, it's what the economic forecasting tells us. The global economy is in the shit, and we're about to entire a cold war with our biggest trading partner, China.
Once the Covid stimulus measures wear off towards the end of the year we will feel the full brunt of an economic recession. The banks know this which is why they are offering low fixed rates now. This is not because they are your friend and want to help you out, it's because credit is about to get really cheap and they want to lock in some profit margins while they still can.Ultimately it's all a gamble, but the house never loses, and banks only offer low fixed rates when they expect rates to drop even lower. Are you willing to bet against a bank?
@1st-Amendment: The banks are offering really low fixed rates now, not because they think rates will go lower, but because they have access to the RBAs term funding facility which gives them access to 0.25% three year funding. This is in addition to the RBAs bond buying program which is supporting lower yields on long term funding. Margins on variable loans are much lower for banks at the moment which is why variable will stay above fixed rates for a while yet.
@El-Rhi: Oh right, I wasn't aware of the TFF. Link here if others are interested: https://www.rba.gov.au/mkt-operations/term-funding-facility/…
@1st-Amendment: Expect fixed rates to go up 30-50 bps from October, unless it’s extended by the RBA.
@El-Rhi: There is more to it than that. Given the massive debts the government will end up with the government will want to hold bond yields low. If anyone believes we've been having below 2% inflation for the last 10 years? It is just a way for the government to deflate their debts away.
It is a lot easier to pay your debts when interest rates are 0.75% than if they are 3% so just manipulate the CPI.
I am a non resident with 100k savings and 60k annual salary. Can I buy a house?
Ask a broker not randoms on the internet.
so funny
No offset no thanks
will they take the 20k super withdrawal as a deposit :D
As long as it’s not Monopoly money.
No. Banks don't lend to people in financial distress. By withdrawing super, you are delaring you are in financial distress.
Not necessarily. The criteria to be able to access the super includes having hours reduced by 20%. Some banks will flat out refuse, but others don't care as long as you can service the loan. 20% reduction on a 200k salary as an example is still $160k income.
As someone who refinanced a UBank mortgage last month, the only question I was asked via email regarding the current COVID situation was about whether my employment has been affected by it. I simply answered no it hasn't, and I don't foresee it being. Job done.
UBank will look for evidence of genuine saving. If you're withdrawing $10k from your Super then it's not genuine ongoing saving from your income. It's a one off, and probably wouldn't count.
How do banks know if you withdraw super? Do they ask during loan application process? I have never come across that question so I am just curious. Maybe they just notice it in your transactions on the bank statement?
They'd be struggling to find the last of the credit worthy borrowers by now. But the banks need to keep dancing
Next door they are still gang busters building student accommodation like everyone is going to get paid. Can see how that is going to turn out.
What I really like about the offer is they're reducing borrowing costs for existing customers. Previously the bank would give the middle finger to existing customers as hey, they're unlikely to spend the time and effort to refinance.
UBank can cut rates to sub 2% for all I care. It just makes me pay off my debt faster, and I won't be going nuts buying investment properties.
UBank can cut rates to sub 2% for all I care. It just makes me pay off my debt faster, and I won't be going nuts buying investment properties.
Somebody had to say it and that was me.
Problem is there is people who are nuts and go buying investment properties. For every one person who thinks they got a good idea there is another 100k+ people who have the same bright idea. Problem is investment properties tank in value so does owner occupy. So you better start passing on the message not to go nuts buying investment property.
Low interest rates are not a good thing. It is signs of a dysfunctional economy. Low interest rates might help you pay off that mega loan you took out. But consider in retirement your bank interest is basically 0.8%. Because of how bad the margins are then listed banks pay out less dividends. Other companies look at the 0.8% bank interest and throw you some extra say 2 - 3% and tell you to be thankful.
The good news netjock is my home loan is modest in size and I'm enjoying the ever lower interest rates that help me pay it off even faster. No one wants to be in debt and having that monthly payment hanging over you is a ball and chain around your ankle.
I agree that rock bottom interest rates are a sign of economic trouble but we're just joining the large club of other economies (EU, UK, USA, Japan, etc) with low rates. Should we have much higher rates than them? Why?
As for what others do with their investment properties, that's for them to decide and I have no influence. Loading yourself up to your eyeballs and hoping to offload the property onto a greater fool for a tidy profit is a national sport in this country. I'm not participating and don't support it. I just want a place to live. Shocking, I know.
@Cluster: I don’t disagree. The other school of thought though is when debt is so cheap why pay it off faster - the higher the debt cost the faster you want to pay it off. You could use excess money for other purposes and then pay down the debt later on. Eg at the moment I’m investing spare money in equities rather than paying down a cheap home loan. I totally get the mindset of having the mental burden gone that’s for sure, but I’m looking forward to doing that down the track in a lump sum rather than chipping away at it.
This is what I like about UBank.
I’ve always had the same rate as new customers. Never have had to ask.
I agree as well. Ironically, they are part of nab.
City bank is already offering basic loan at 2.49 and you get $2000 cashback
Any reviews on their application process?
Attempted to refinance through TicToc last year and they ran me around in circles for weeks before rejecting my application.
Decent. I also had not so good exp with tictoc…but with ubank it was good experience during and after application..
Came to ask the same. Applied to UBank a few years ago and they asked for a ridiculous amount of documentation and kept asking and kept asking and kept asking until I just gave up. Is it any better now?
We have plenty of assets and two good jobs. It was very odd. Honestly, surprises me that they have any customers with hurdles that high.
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score, my loan just settled a few days ago! nice little bonus.