Until recently, G&C Mutual Bank's Essential Workers Home Loan advertised an ultra-competitive interest rate of 5.80% p.a. (5.83% p.a. comparison rate*) to owner-occupiers.
But that rate is no more.
As of Wednesday morning, the product advertises a rate 15 basis points higher, at 5.95% p.a. (5.98% p.a. comparison rate*).
The move follows the Reserve Bank of Australia (RBA) board's decision to hold the cash rate at its 12-year high in August, with RBA governor Michele Bullock all but dashing hopes of a 2024 rate cut.
That puts it in league with products from other banks and popular non-bank lenders.
The rate hike put forward by G&C Mutual would see the monthly repayments on a $600,000 home loan increase from around $3,520 to approximately $3,578 - a $58 per month difference.
To see how much an interest rate hike could impact your budget, turn to Your Mortgage's home loan repayment calculator.
G&C Mutual was contacted for comment but did not respond in time for publication.
Eligibility criteria
As the name suggests, the Essential Workers Home Loan caters to borrowers working in specific roles deemed to be 'essential'.
These are frontline ambulance officers and paramedics, firefighters, police officers, corrective services officers, nurses, aged care and disability workers, teachers and early childhood educators, and defence or military personnel.
The bank might also consider 100% of an essential worker's overtime and shift allowances as income when assessing their loan application.
Many other banks and lenders might only consider a portion of such non-secured income.
The product is only available to homebuyers and external refinancers. Those who already hold their home loan with the bank aren't eligible.
Loan features
Unlike many other low-rate home loan options, G&C Mutual's Essential Worker Home Loan comes with an offset account at no charge.
Other features include:
- Maximum loan-to-value ratio (LVR) of 95% (Lenders Mortgage Insurance (LMI) is needed if LVR is over 80%)
- Redraw facility
- No monthly fees
- Up to $1,000 of third party costs potentially covered, minimising costs like valuation fees
Other home loans with variable rates under 6.00% p.a.
While still competitive, the 5.95% p.a. variable rate now advertised on the Essential Workers Home Loan is now a cry from market leading.
Other lenders promising similar variable rates include:
| Lender | Home loan product | Interest rate (p.a.) | Comparison rate* (p.a.) |
|---|---|---|---|
| Tiimely Home | Variable | 5.94% | 5.95% |
| Reduce Home Loans | Eco Home Loan Variable (60-80% LVR) | 5.94% | 5.99% |
| Up Bank | Up Home Variable | 5.95% | 5.95% |
| Loans.com.au | Solar Home Loan | 5.99% | 6.51% |
| Unloan | Variable Rate Home Loan | 5.99% | 5.90% |
For reference, RBA figures show the typical rate on new, variable rate, owner-occupier home loan signed in May was approximately 6.30% p.a.
Meanwhile, the most competitive fixed rates on the market appear to be on offer for those fixing their rates for around three years.
G&C Mutual Bank still advertises a rate of 5.80% p.a. for owner-occupiers fixing their interest rate for a three year period.
See also: NAB slashes fixed home loan interest rates to under 6%
Image by Zoe Askew on Unsplash
Collections: Variable Home Loan Interest Rates Mortgage News
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