Cheapest home loan rates on the market

Cheapest home loan rates on the market

The  Reserve Bank announced the cash rate will hold at 1.5% yesterday, after its first meeting for 2017. Despite this marking the fifth consecutive meeting (in six months) with no change, home loan rates have been steadily rising since late last year.

Movement of the cash rate in the near future is looking to be increasingly unlikely with the RBA board listing a series of long-term concerns such as GDP, inflation and a hot property market as key factors in the decision to hold.

While the RBA is expected to sit on its hands in the coming months, the home loan market isn’t as eager to wait and see.

“Since the end of last year we have seen 33 lenders lifting home loan rates, particularly when it comes to fixed-rate loans,” says Peter Arnold, data insights director at RateCity.

“Hiking fixed rates is the first indicator that banks are expecting their costs to increase and a low-rate environment to come to an end.

“As expected, variable rates are now following suit with 117 rate increases since the start of the year, mainly affecting existing borrowers.”

Since the start of 2017 rates have been lifted on a total of 382 products, including loans from two of the big four banks, ANZ and NAB.

Yet with no official cash rate move, lenders are showing little consistency across the board.

The bottom end of the market is still offering incredibly low rates to both owner-occupier and investor refinancers who have solid equity built up in their property.

For borrowers who want to take advantage of the current low rates ahead of an uncertain year, fixed-home loans are likely to be an attractive option. Evidently towards the end of last year RateCity saw a sharp increase in appetite for fixed loans with 30% more customers looking to fix.

The lowest three-year fixed loan (the most common fixed term) for owner-occupier borrowers is currently 3.59% with Easy Street Financial Services.

For those who prefer a variable rate, Reduce Home Loans leads the pack, offering 3.35% to owner-occupier borrowers.

Investor rates are almost as low, with Northern Beaches Credit Union offering a 3.69% rate to new customers on a three-year fixed loan.

Loans.com.au offers the most competitive variable rate at 3.59%, with Pacific Mortgage Group and Reduce Home Loans also offering low rates for investors with an 80% or lower loan-to-value ratio (LVR).

The RBA’s statement on monetary policy will be released on Friday, providing a better insight into the board’s forecasts for growth and inflation.

Top owner-occupier three- year fixed rates

Owner-occupier three-year fixed rates Advertised rate Comparison rate Monthly repayment
Easy Street Financial Services 3-Year Fixed 3.59% 4.03%  $2043.38
Pacific Mortgage Group 3-Year Fixed 3.65% 3.62%  $2058.57
Ubank 3-Year Fixed 3.69% 4.00%  $2068.73

Source: RateCity.com.au

Top investor three-year fixed rates

Investor three-year fixed rates Advertised rate Comparison rate Monthly repayment
Northern Beaches Credit Union   Fixed-Rate Home Loan (New Money Offer) 3-Year Fixed 3.69% 4.93% $2068.73
SCU – Fixed-Interest Rate Investment Loan 3-Year Fixed 3.69% 4.44% $2068.73
UBank – Investor UHomeLoan Fixed 3-Year 3.69% 4.21% $2068.73

Source: RateCity.com.au

Top owner-occupier variable rates

Owner-occupier variable rates Advertised rate Comparison rate Monthly repayment
Reduce Home Loans – Rate Buster Standard Variable 3.35% 3.35%  $1983.21
Homestar Finance – Basic Refinance Loan 3.44% 3.48%  $2005.66
Mortgage House – Pure and Simple Special Home Loan (Spring Special) 3.49% 3.49%  $2018.19

Source: RateCity.com.au

Top investor variable rates

Investment variable rates Advertised rate Comparison rate Monthly repayment
loans.com.au – Smart Loan Package (principal and interest) 3.59% 3.61%  $2043.38
Pacific Mortgage Group – Standard Variable Investment Loan (amounts < $2m, LVR < 80%) 3.79% 3.79%  $2094.25
Reduce Home Loans – Investor Rate Buster Variable (amounts < $750k, LVR < 80%) 3.79% 3.79%  $2094.25

Source: RateCity.com.au

Patricia Babalis is a personal finance writer for RateCity.com.au.

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