Buying a home over summer: home loan rates, repayments and more

As we sit on the cusp of summer and the twilight days of 2023, some prospective home buyers might be wondering if now is a good time to get onto the property ladder. 

Generally speaking, summer tends to be a much quieter period for buying activity than other seasons. Regional buyers - in typically smaller locales - may find a lack of available stock on the market which could be a negative for those looking outside the big cities. 

If you’re in a big city like Sydney or Melbourne, it’s possible that this quieter time in the property cycle may have some opportunities for savvy buyers, due simply to the scale of these markets. However, there are some things to keep in mind before you jump straight in.

Keep home loan interest rates in mind

While exploring home loan options, you should keep an eye on home loan interest rates. Even a slight difference in rates can significantly impact your monthly repayments and the total cost of the loan. 

The RBA hiked the cash rate at last November’s meeting, meaning that many lenders have raised interest rates on home loan products. Many economists are predicting that these rates will stay where they are for some time. 

Fixed vs variable rate loans

For those wary of fluctuating interest rates, summer might be the right time to lock in a fixed rate. Fixed-rate home loans can offer stability in your repayments, making financial planning more predictable. However, this comes at the cost of flexibility, such as the ability to make extra repayments without incurring fees.

While fixed rates can protect you from further rate rises, they also come with the downside that any future rate cuts won’t flow onto you. That’s where variable rate loans come into play. Basically, variable rates mean that any hikes or cuts will flow on as soon as your bank chooses to pass them on to you.

Home Loan Features to Consider

Apart from interest rates, there are other home loan features to keep in mind. Some of these include:

• Offset accounts and redraw facilities: These can offer flexibility and potential savings. An offset account can reduce the interest payable on your loan, whereas a redraw facility allows you to access extra repayments if needed.
• Repayment schedule: how frequently you want to pay back your loan can be helpful. If you’re paid monthly for instance, you may find it easier to also make repayments monthly rather than weekly or fortnightly. 
• Extra repayments: Some home loans let you contribute more to your loan when you’ve got a little extra cash on hand. Unlike an offset account, you may have to negotiate with your bank to withdraw this cash as it is treated as the bank’s now. 

Preparing for the Home Loan Application

Before diving into the summer home market, make sure your finances are figured out. You can do this with an emergency fund in a high interest savings account as well as budgeting income and expenses. 

Having a good idea of your credit score can also give you an idea of the kinds of interest rates you can expect. Also, getting pre-approval for your home loan, can give you a clear idea of your budget.

If you’re ready to get started, then you can check out some home loan providers on our main hub page. Alternatively, you can compare some of the providers below….