Athena Home Loans Cuts Mortgage Rates to 1.89%

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At a time when home lenders are raising interest rates left, right and center, Athena Home Loans has bucked the trend by cutting its variable home loan rate to a low of 1.89%.

Athena Home Loans today revealed that it is reducing variable rates for all new and existing customers. This brings his lowest variable bid to:

Although the Reserve Bank of Australia has not cut the cash rate since November 2020, mortgage lenders have continued to move interest rates off the cycle.

In fact, the RateCity database shows that more than half of all lenders have raised at least one fixed rate in the past two months alone, including the big four banks.

The number of mortgage lenders who have increased fixed mortgage rates since September 2021 is 88. Comparatively, only 5 lenders have increased their variable mortgage rates during the same period.

Athena’s new variable rate of 1.89% is in the top 1% of current variable mortgage rates on the RateCity database.

Athena CEO and co-founder Nathan Walsh said: “There is a lot of speculation that the cash rate will rise later this year, so we have the opportunity to allow our customers to save more and advance on their loan before that happens. This is the reason for our voluntary rate cut.

Generally speaking, if lenders expect the spot rate to fall – which they have done since November 2010 – fixed interest rates can on average be lower than variable rates. However, with many pundits tipping the cash rate to rise as early as this year, it could mean more Australian lenders could ax their variable home loan rates.

RateCity Research Director Sally Tindall said: “While we expect further variable rate cuts over the next few months, we could see some lenders increase later this year ahead of the RBA, if the cost of funding continues to rise.”

So if you’re one of the many Australian borrowers starting to pay off your fixed rate home loan, it may be worth considering your options as soon as possible.

Should I change my mortgage?

If your fixed rate home loan term is coming to an end, you may already know that your lender will usually switch you to their standard variable rate, also known as the “return rate.” These rates can often be higher than the flat rate offered to you as a new customer.

If you haven’t set a date in your diary for when the return rate takes effect, you might be shocked when your mortgage payments return to a higher interest rate. However, if your fixed term is ending and you have accumulated some equity on your mortgage, you may be able to consider refinancing with a lower rate lender.

COO and co-founder of Athena Home Loans Michael Starkey expects refinancing to grow as customers who got a low fixed rate a year or two ago start coming to the end of their fixed conditions.

“A lot of customers will lower their 1 and 2 year fixed rates they got in the first lockdown and get bitten with much higher variable rates, some of which can exceed 3%,” he said.

“It’s a great opportunity to switch to a provider that’s on their side – and gives them rates starting with 1,” said Mr. Starkey.

There are several pros and cons to switching mortgages, but the final decision should be based on your personal situation and financial situation.

There may be costs associated with changing your home loan, and you will still need to meet a lender’s eligibility criteria to get approved for the loan, including having a good to excellent credit score. Additionally, you’ll want to make sure to carefully compare your options before deciding to refinance so that the lender and home loan best suits your budget and goals.

That being said, by refinancing a $450,000 home loan at an average rate of 2.70% (based on the latest RBA Housing loan rates) at 1.89%, you can save $181 per month in fees. of interests.

Over a year, that could mean a savings of $2,172, the equivalent of your annual energy bill or a family weekend.

Repayments of a $450,000 home loan at various rates

Interest rate Monthly repayments Annual repayments
Mortgage A 2.70% $2,064 $24,768
Home loan B 1.89% $1,883 $22,596
Difference 0.81% $181 $2,172

Source: Average rate based on RBA Housing loan rates, November 2021 (homeowner, all loans, all institutions)

Note: Hypothetical figures based on a $450,000 25-year home loan. Does not take into account rate changes or fees over a 12-month period.

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