There are 50 lenders now offering a total of 126 home loan under 2 per cent.

PHOTO: RateCity.com.au

There are 50 lenders now offering a total of 126 home loan under 2 per cent.

That’s 40 per cent of the 124 lenders on the RateCity.com.au database with at least one home loan rate starting with a ‘1’.

On the average $400,000 home loan, a rate under 2 per cent brings the cost of mortgage repayments down to less than $50 a day.

There were 11 lenders with rates under 2 per cent right before the November 3 RBA cash rate cut. Since then, the list has more than quadrupled.

RateCity.com.au database analysis:

  • 126 home loans have advertised rates under 2% from 50 different lenders.
  • 3 of the big four banks have rates under 2%.
  • 48 lenders have fixed rates under 2%; the lowest is 1.88% for 2-years.
  • 9 lenders have variable rates under 2%; the lowest is 1.77%.
  • 7 lenders have both variable and fixed rates under 2%.

RateCity.com.au analysis shows if the average borrower took out a $400,000, 30-year loan that was under 2%, their mortgage repayments would be less than $50 a day.

Loan size Monthly repayments 2% Daily cost
$400,000 $1,478 $49
$750,000 $2,772 $91
$1,000,000 $3,696 $122

Note: based on an owner occupier paying principal and interest on a 30-year loan.

RateCity.com.au research director Sally Tindall said home loan rates under 2 per cent were becoming the new norm.

‘At the start of this month a rate under 2 per cent was as rare as hen’s teeth. Today there’s well over 100 of them.

“On a $400,000, 30-year mortgage, a loan under 2 per cent costs less than $49 a day, even when paying down both principal and interest.

“Record low interest rates have supercharged people’s borrowing power. As a result, some first home buyers are finally finding themselves in contention at open homes and auctions,” she said.

The latest ABS lending finance figures show there was a 51% increase in the number of first home buyer loans over the last year in original terms.

“The formula of record low rates and government grants seems to have hit the sweet spot for many first home buyers. They’re finally enjoying their time in the sun.

“Two years ago, the lowest variable rate was 3.44 per cent. Today its 1.77 per cent and it’s not just the low-cost lenders that have moved. The whole market has been forced to follow behind them.

“Just last year, owner occupiers with a rate in the threes probably thought they had a cracking deal. Today, you’d be pretty mortified with that,” she said.