A digital bank has gone live with its lowest ever advtertised rate – and the lowest fixed rate available in Australia, as of 25 January 2020.
UBank has reduced its three-year fixed offering for owner occupiers paying principal and interest to 1.75% (comparison rate 2.22%) per annum for new customers who apply before 26 February 2021, in addition to cutting its range of other fixed rates between 0.15% and 0.35%.
According to UBank CEO Philippa Watson, the limited time offer shows the group's commitment to providing "sharp rates" to its home loan customers amidst the record low interest rate environment; in the last year and a half since May 2019, UBank has more than halved its fixed interest rate on its 3-year owner occupier P&I loan, from 3.59% to 1.75% p.a.
“We expect to see continued and fierce competition from all the banks, which can only benefit Australian homeowners. We’re delighted to be part of that and we’re looking forward to being able to support our customers with these great rates,” Watson said.
The new rate from UBank, a subsidiary of NAB, is 0.13% below the next lowest fixed rate and 1.34% lower than the average existing owner-occupier rate of 3.09% indicated by RBA data.
There are now 53 lenders offering at least one fixed or variable rate under 2% on over 120 different home loans, according to the RateCity.com.au database.
As the comparison site's research director Sally Tindall sees it, UBank's rate cut is "designed to get people to act".
“Lenders have been offering home loan rates under 2% since June last year, yet thousands of existing mortgage holders seem content with the idea of paying a rate starting with a ‘3’,” she said.
“Putting an expiry date on this deal could help combat complacency among mortgage holders.
“Mortgage holders suffering from inertia are likely to be getting fleeced."