The Commonwealth Bank of Australia (CBA) has announced a new digital home loan with a discount that increases every year for up to 30 years.
Unloan offers owner-occupiers one low variable rate, priced at 2.14 per cent (2.06 per cent comparison rate), including a loyalty discount that grows by 0.01 per cent every year, up to 30 years.
For investors, Unloan also offers one low variable rate of 2.44 per cent (2.34 per cent comparison rate) and the same loyalty discount that grows by 0.01 per cent every year, up to 30 years.
Also read: $257 in interest: The rate hike winners
Unloan allows applications to be completed in as little as 10 minutes.
CBA said Unloan would be accepting applications to refinance home loans up to $3 million and up to 80 per cent of the property’s value.
In the coming months, Unloan plans to expand into new home loans, and also enable Open Banking-powered assessments for an even faster application experience.
“Driving digital innovation for our customers – including the delivery of distinct and differentiated customer experiences – is core to CBA’s ongoing strategy,” CBA CEO Matt Comyn said.
“Unloan is a powerful example of what can be achieved by successfully bringing together the pace and innovation of the startup world with the scale and assets of Australia’s leading bank.”
How does it compare?
Unloan vs CBA variable customers
Canstar compared a borrower with Unloan and its loyalty discount to a borrower on CommBank’s lowest variable rate of 2.29 per cent and its package variable rate of 3.85 per cent, all over a seven-year period.
The analysis keeps interest rates constant over the period for comparison purposes while adjusting for Unloan’s loyalty discount.
The results show Unloan customers when compared to CommBank customers on a package variable rate could benefit longer term from lower monthly repayments of around $476, and savings of approximately $58,216 in interest over the seven-year period.
Unloan vs average variable rate
Analysis from Canstar showed monthly repayments for an owner-occupied borrower with a 30-year $500,000 mortgage would equal $1,883 under Unloan’s rate of 2.14 per cent.
This worked out to be $288 cheaper than monthly repayments at the average variable rate of 3.23 per cent, which would equal $2,171.
“The timing of CommBank’s Unloan launch is impeccable, given around $19 billion worth of CommBank home loans are about to roll off fixed rates in June,” Canstar editor-at-large Effie Zahos said.
“For those fixed-loan customers facing an increase in repayments, this new digital home loan offering presents a great opportunity for the bank to keep its customers within the group.”
Zahos said that while Unloan was not the cheapest variable rate on the market, it could be a simple option that worked for some.
“It’s a simple proposition – a no-frills home loan with a basic rate, no fees and a loyalty discount,” she said.
“However, with the loyalty discount sitting at just 0.01 per cent per year, Unloan customers would have to remain loyal for a total of 35 years for it to match the current cheapest variable rate in the market for an 80 per cent LVR [loan to value] loan.”