Australian Digital Bank UBank to Reduce Its Home Loan Rate to Historical Lows for New and Existing Clients

Australian neobank UBank, a leading digital challenger, has reportedly reduced its home loan rate to its historical low.

UBank’s management noted that they’ve made a 0.10% to 0.15% per annum out-of-cycle reduction to the bank’s variable home loan rates.

New property owner and occupier home loan clients that are making payments toward the principal amount and also paying interest will now be offered a 2.49% per annum variable rate, which the digital bank claims is the “lowest advertised variable home loan rate” in its 10+ years since it began offering services.

UBank said that the rate adjustments will apply to new and existing clients beginning on July 17 2020 and might help people save approximately AUD 400 during the first year on an AUD 400,000 owner-occupier home loan “paying principal and interest.”

Philippa Watson, an executive at UBank, pointed out that the change in the rates shows that the digital challenger is supporting its clients “at a time when they need it most” – as individuals and businesses across the globe struggle to cope with the socioeconomic challenges created by the deadly COVID-19 outbreak.

Watson remarked:

“Owning your own home can be incredibly rewarding but the past six months have caused many Aussie homeowners to feel the pinch.”

She added:

“We are glad to have supported so many of our home loan customers by offering repayment pauses to those who have needed some extra help during this time, and today’s announcement is an extension of that support.”

UBank’s management also mentioned that there’s been a 0.15% per annum reduction to its UHomeLoan 1-year and 3-year fixed rates. The bank confirmed that it will be waiving the $395 rate locking fee for new fixed rate loans that are settled on or prior to September 30, 2020.

The updated 3-year fixed rate (effective since July 8, 2020) is 2.14% p.a for owner occupier home loans that are paying principal and interest.

UBank noted that, in July of last year, it reduced its variable interest rates by 1.10% per annum, which could potentially help clients save “an additional $4,380 on a $400,000 owner occupier loan paying principal and interest in the first year and a possible $85,654 over the 30-year loan term.”

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