Like a lot of other lenders with home loans under 2%, borrowers must be willing to package and fix their loans for two to three years.
- Premium Package Fixed 2 Years: 20 basis point cut to 1.99% p.a. (3.23% p.a. comparison rate*)
- Premium Package Fixed 3 Years: 20 basis point cut to 1.99% p.a. (3.15% p.a. comparison rate*)
With these loans, borrowers must have a minimum 30% deposit, i.e. 70% LVR, and pay principal & interest (P&I).
Bank Australia says its 'money is clean' because it's never loaned to fossil fuel industries or to live animal exporters.
All loans are subject to its 'Responsible Banking Policy', with Bank Australia having a penchant for individual borrowers, community renewable energy, and community and disability housing.
See also: Concerned about climate change? Consider switching your super
Bank Australia was contacted for comment in regards to how much it had drawn down from the Reserve Bank's Term Funding Facility (TFF).
Under the TFF, banks can draw down low-cost funding at a rate of 0.10% p.a. over a period of three years (previously 0.25%), which partly explains why so many lenders offer competitive home loans under 2% on fixed terms of two to three years.
Bank Australia also has a securitised 'warehouse facility' through ANZ, which provides funding through means other than deposits.
ANZ has previously loaned to fossil fuel industries but has vowed to end funding to thermal coal by 2030.
Other notable rate movements
On Monday, MOVE Bank also cut below the 2% barrier, on its 'Complete Package', fixed for one year.
It was cut by 20 basis points to 1.99% p.a. (3.11% p.a. comparison rate*).
Borrowers can have as little as a 5% deposit - i.e. a 95% LVR - but must pay P&I repayments.
Conversely, MOVE also raised the interest rate on its equivalent three-year fixed loan by 30 basis points.
Bank of Us also cut a few home loan rates.
Most notably its 'FlexiDiscount' home loan fixed for two years was cut by 20 basis points to 2.29% p.a. (2.73% p.a. comparison rate*).
On that particular loan, borrowers must have a minimum 20% deposit, though Bank of Us also offers home loans to borrowers with smaller deposits.
Previously, these loans were among the first to be cut below the 2% threshold - albeit for Tasmanian residents only - yet they were offered for a limited time, raised, and then cut again.
Photo by Dan Meyers on Unsplash
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Harry O'Sullivan
Denise Raward
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