Digital bank UBank has announced its lowest ever advertised variable rate, dropping below the 2% barrier for the first time to set a basic 80% loan-to-value ratio (LVR) variable of 1.99%.
The change comes as banks across the board are raising rates, with almost 20 major fixed rate rises from the Big Four in the last two months. Variables have not seen as much upwards movement, though they are no longer at the levels that were common just six months ago.
The lowest variable rate on the market remains 1.75%, set by Reduce Home Loans. No Big Four bank is anywhere near that level: the cheapest major lender rate is the 2.19% set by Westpac.
Variables have, in general, been moving slightly downwards in the last few weeks with 48 rate cuts and only 7 hikes. However, the era of ultra low rates that was in full swing before the winter lockdowns is well and truly over, with rates sure to rise in 2022 in advance of an expected cash rate rise in 2023.
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UBank were confident that setting the cheapest interest rate that they had ever set would be of long term benefit to their customers.
“This is the lowest variable rate UBank has offered in our 13-year history, and we’re pleased to be offering it to new owner occupier customers who could save hundreds of dollars a month on their home loan repayments,” said UBank CEO Philippa Watson.
“With new data showing the average family now spends 36.2 per cent of their income on loan repayments – the highest level since the market emerged from the global financial crisis in 2008 – it’s more important than ever for customers to review their current rate and check how much they could be saving.”
