Home loan rates rising close to boom levels

Australia’s major banks are continuing to raise their home loan rates above the official cash rate, suggesting that mortgage costs could soon reach the peaks seen during the economic boom.

Research carried out by the Australian revealed that lending rates now stand at between 274 and 301 basis points above the official cash rate of 4.25 per cent.

It noted that Westpac’s standard variable mortgage rate of 7.26 per cent is currently the most expensive among the major banks, with NAB the cheapest at 6.99 per cent.

In addition, the newspaper observed that with Australia’s official interest rates rising quickly in recent months, the margins with bank lending have grown wider than they were during the economic high of March 2008. In that month, with the RBA rate at 7.25 per cent, Westpac’s standard variable rate stood at 9.27 per cent – 202 basis points above the cash rate, it said.

Australians were given further cause to compare home loans this week when Money Au reported that Australia Finance Group, a major broker, has seen its refinancing activity hit a record high of 37.2 per as a range of smaller lenders return to the market.

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