The gap between the average variable home loan rate of the major banks and the lowest offer on the market has widened considerably since September 2014, according to a comparison website.
Mozo.com.au said the lowest variable home loan rate has reached a new low of 3.84 per cent (the rate of the iMortgage Fusion 80 product), with intense competition from challenger lenders driving the downward trend.
Meanwhile, Mozo data shows that the average variable home loan rate is now one per cent more expensive than the lowest rate on the market – up from 0.84 per cent 12 months ago.
Mozo marketing director Kirsty Lamont said spring is traditionally the season for home loan discounts, and this spring season is shaping up to be a “borrower bonanza”, with rates hitting unprecedented lows.
“Online lenders and challenger banks are tightening the screws on the big banks and aggressively lowering rates in a sign that home loan competition is now well and truly back to pre-GFC levels,” she said.
“Borrowers who look outside the big four banks can now access huge savings, with the top five home loan rates right now all below four per cent and exclusively from smaller lenders.”
A one per cent difference between the average big four bank rate and the best on market works out to be a saving of $20,640 over 10 years on the average home loan, Mozo said.
Furthermore, Mozo said those borrowers looking to refinance could also be up for big savings, with those who switch from the average big four rate (4.86 per cent) to the lowest variable rate potentially saving $172 in monthly repayments or $2,064 over 12 months.
“An even bigger saving can be had if switching from the highest variable home loan rate to the best available offer, which puts $4,356 back in the pocket each year,” Ms Lamont said.