This is a round-up of rates in January and some may have changed since the time of writing. To check on today’s rates click on the highlighted product.
The RBA does not meet in January (except in extraordinary circumstances), so no change in the cash rate and little reason for the banks to adjust their rates. There has been some talk that easing cost of funding for the banks may prompt them to cut rates without waiting for any RBA movements. The Mozo Rate Chasers aren’t holding our breath for that though as recent history has shown the banks are keen to hold on to as much of their interest rate margins as they can. That said, we did see a few interesting movements in January…
The average variable rate for a home loan of $300,000 is 5.92%, but the best rates out there are around the 5.30% mark.
UBank made an aggressive move at the end of last week and cut its headline variable rate product to 5.12% which includes an up-front 25 basis point discount on its variable rate. The change gives the (NAB owned) online brand the cheapest variable rate in the market so it will be interesting to see whether any others follow suit.
Fixed home loan rates also continued to move down. On a $300,000 loan the average 1 year rate is 5.43% and for 3 years it’s 5.50%.
The best available for one year is iMortgage’s 4.99% for loans with an LVR of less than 75%. However lenders offering 4.99% for one year are becoming more common with 7 lenders rates at this level now, compared with 5 at the start of January. This includes packaged loans from ME Bank and Greater Building Society, and Newcastle Permanent’s standard fixed rate with no annual package fee.
The best 3 year rate is 5.09% offered by My Mortgage Freedom, although again only for loans with an LVR of less than 75%. The best for those with LVR’s of more than 80% are ME Bank’s Member Package and My Mortgage Freedom, both on 5.19% .
Care needs to be taken when considering cheap fixed rate loans though. Many of these low rate offers have restrictions on how much of the loan can be on the fixed rate, with the rest variable. Of those quoted above only the rates from Greater Building Society and Newcastle Permanent can be had as a 100% fixed option.
As for home loans, deposit rates continue to head down. The average rate for a deposit of $25,000 is down across all terms since the start of the year. Bucking this trend is UBank which reduced rates on some shorter terms, but increased its one year fixed rate by 15 basis points to 4.70%. If this rate appeals jump in now as it’s unlikely to last, especially if the RBA announces another rate cut at its meeting on 5th February.
The RBA cash rate is at its lowest point in the last 3 years but more cuts are anticipated over the coming months so some exposure to variable rates is likely to benefit those with mortgages, while savers should try to lock in the best rates they can find now.