Money: Mortgage lenders compete for market's bottom dollars

As mortgage lenders compete, a battle is going on for the right to claim the lowest rates on offer.

Here's a look at some of the offerings from the bottom end of the market.

Low start loans: often called "honeymoon" loans, these offer a discounted rate at the beginning of the loan. The attractions are obvious, but remember that it's the long term cost that really matters.

The ANZ's "Easy Start" loan kicks off at 7.7 per cent for the first year, then reverts to the bank's floating rate (at present 8.5 per cent). After three years you can stay on the variable rate, or switch to another ANZ loan.

That 7.7 per cent can change, but the bank says it will always be well under the standard floating rate. There may be an upfront fee of up to $500 and you will face a fee if you repay the mortgage or switch to a different type of ANZ loan in the first three years.

"Mortgage banker" Cairns Lockie is offering new borrowers a "Quick Start" loan at 7.75 per cent fixed for the first year then the company's floating rate (now 8.25 per cent). There is an upfront fee of up to 0.5 per cent of the amount borrowed (minimum $400) and a $500 fee if the loan is repaid in three years.

Floating rates: Wizard Financial Services has a no-frills "Rate Breaker" loan at 7.79 per cent. There is a $500 upfront fee and you will face an extra charge if you repay the loan in the first four years.

Conditions are much more restrictive than Wizard's standard floating rate mortgage but it is possible to switch to a more flexible (and more expensive) loan for a $1000 fee. Wizard is also offering a somewhat more flexible floating rate loan, at 7.99 per cent.

Other cheap floating rates come from Silver Fern (7.81 per cent, upfront fee negotiable to a maximum of 1 per cent of the loan's value and a penalty if you repay more than half the loan in the first five years) and Resi Home Loans (7.85 per cent on loans up to $100,000, $350 upfront fee, plus a $250 valuation charge).

Fixed rates: On the one-year front, one of the lowest rates comes from Southern Cross Building Society, at 7.7 per cent for loans of $150,000-plus. There is an upfront fee of 0.5 per cent of the loan, and penalties for early repayment. AMP Banking is charging 7.79 per cent for the same term, with a $400 upfront fee, and penalties may apply for lump-sum or early repayments.

One of the lowest three-year rates is being offered by Silver Fern, charging 8.07 per cent, with a negotiable up-front fee.