With interest rates so low, competition amongst lenders continues to be strong.
At its May meeting the RBA decided to cut the cash rate by 0.25% to a record low of 2.00%. What does this mean for home loan interest rates? Did the Banks pass on the rate cut in full? Does it mean further reduction in fixed rate loans?
Following on from the RBA announcement, all of the major Banks have announced they are cutting their rates on variable rate home loans, but only one, ANZ passed on the rate cut in full. A quick look at the standard variable rates for the Banks shows an interest rate of around 5.47%, some banks a little cheaper, others a little more expensive.
Although most media outlets talk standard variable rates, when discussing your home loan with your Bank this should not be your final rate. All Banks offer discounts under a package. The amount of the discount is dependent on how much you are borrowing, how much your loan will be in comparison to the value of your house and more recently if the purchase is for an owner/occupier or investment, or if you are repaying principal and interest or interest only. A 0.7% discount is readily available across most lenders, reducing the effective rate to 4.77%.
However, particularly for loans over $500,000 this is still expensive. Competition amongst lenders continues to be strong, as such interest rates below 4.4% are still being offered. In the fixed rates space, rates can be even lower. We continue to see rates for one to three year fixed rate loans below 4.3%. It would appear though that fixed rates may start to increase, following the RBA announcement a couple of lenders that had a rate below 4% moved to increase their rates.
It is not just about interest rates either, a couple of lenders continue to offer rebates for refinancing your loan, whilst others are waiving the package fee costs. This could assist in paying the costs of moving your loans.
The multitude of offers currently in the marketplace can be confusing, so using a mortgage broker can help take some of the noise out of the process. Mortgage brokers receive commission paid by the lenders. Most offer a mobile service, take care of all the paperwork, and can really add value for those who are self-employed. Speak to your Mortgage Broker today, they may be able to save you thousands over the life of your loan.
See also: