Many Australians are focussing on reducing household costs right now, and saving on interest repayments by switching to a better value home is a great place to start. Since Covid-19 hit our shores, the number of Aussies refinancing their mortgage has spiked as rival lenders cut rates to woo borrowers from the major banks, with some genuinely big savings now available for those who are prepared to shop around.
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Fourteen months after being directed by Treasurer Josh Frydenberg to conduct an inquiry into home loan pricing, the Australian Competition and Consumer Commission (ACCC) has released its final report in which it urges Aussie homeowners to review their home loan rates to potentially save thousands of dollars.
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What a year 2020 has been for Australia’s property market. As COVID-19 left no corner of life untouched, we saw home loan interest rates fall to new historic lows, clearance rates in many of our capital cities dip, and housing prices follow a similar downward trend. But the property market has proven surprisingly resilient. According to the latest CoreLogic figures, November is the second consecutive month that dwelling values have risen, following a pandemic-induced drop of 2.1% between April and September.CoreLogic said the recovery has been largely propped up by monetary policy and fiscal policy support, as well as growing consumer confidence and signs that the economy is bouncing back. So amid all the ups and downs, just how much have properties across Australia actually been costing homebuyers? On the one hand, some of our wealthiest made headlines for spending exorbitant amounts on houses located in Australia’s most exclusive postcodes, while on the other hand, there was a real appetite for regional and rural bargains. So to give you a snapshot of properties at both ends, we’ve compiled a list of some of the cheapest and most expensive homes that buyers snapped up over 2020:
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As summer begins competition for borrowers is running hot, especially with lenders dropping home loan interest rates left, right and centre following last month’s Reserve Bank rate cut.
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Prospective first home buyers have more than doubled in 2020, according to new research from Westpac.
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Whether you prefer the convenience of living close to work or you’re one of the growing number of Australians looking for a ‘sea change’, it’s no secret location sits high on the priority list for many home buyers.But it goes without saying that properties aren’t worth the same from suburb to suburb. Median house prices could go from as high as $1,154,406 in Sydney to a much lower $145,500 in Broken Hill, according to the latest figures from the Domain House Price Report. By default, that also means saving a 20% house deposit could either take many years of hard work or be a considerably easier task, depending on the location.For instance, 20% of Sydney’s median house price would currently be $230,881. Whereas for a house in Broken Hill, you could aim to raise just $29,100 - about eight times less - before your 20% deposit is complete. To help you decide how much you’ll need for a deposit for your ideal suburb, our data experts have pulled together an interactive map of median house prices across Australia. From Townsville in Queensland to Broome in Western Australia, hover over the various markers to view what a 20% deposit would look like in each location.
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Many Australians are paying a premium to own their property and for a growing number that high cost has become a bridge too far. In fact, research from the Australian Prudential Regulation Authority in August shows there is $229 billion worth of loans in Australia on temporary repayment deferrals, accounting for around 8.5% of total outstanding loans.
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The Reserve Bank cut official interest rates to 0.1% in early November, but instead of the usual reductions to variable home loan rates it looks like the majority of lenders are slashing fixed rates instead.Since March, the average 2-year fixed rate among providers we track has fallen from 3.13% p.a. to 2.48% p.a. It’s no longer rare to see fixed rates hovering around the 2% mark — in fact, a handful have already dipped below it.So for anyone in the market for a home loan or thinking about changing the terms of their existing one, the fixed rate options currently available can be enticing. But there are a few things you should know before making a move.
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Since the Reserve Bank’s (RBA) decision last week to reduce official interest rates to yet another record low, attention has been on the home loans market to see which banks would follow suit. While responses have been varied, with some focused on slashing variable rates and others on moving fixed rates, one thing is clear: even cheaper home loans are now on the table, especially for borrowers with loan-to-value ratios (LVRs) as low as 60%.LVR refers to the portion of the property value that you owe your lender. So a 60% LVR means you’ve either saved a 40% deposit (if you’re a new customer) or built up 40% in home equity (if you already have a mortgage).Over the past few months, there’s been an interesting trend of lenders serving up their top rate discounts to customers with LVRs of up to 60%. In light of the November RBA cut, these discounts have only gotten bigger. Take Reduce Home loans, for instance, who shaved 12 basis points (bp) off its Rate Cutter Variable loan, available only to borrowers with LVRs of 60% or less. This loan was already one of the most competitive offers in the Mozo database, but now it’s fallen even further to just 1.77% (1.83% comparison rate*).
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Cuts to home loan rates in response to last week’s RBA rate cut continue to flow through, with Newcastle Permanent the latest lender to bring fixed rates below the 2% mark.Effective today, its Premium Plus Package Fixed Rate Special will offer 1.98% p.a. (3.81% p.a. comparison rate*) on 1-year terms and 1.99% p.a. (3.34% p.a. comparison rate*) on 5-year terms. The new 5-year rate reflects a cut of more than 100 basis points, and at the time of writing is the lowest rate among comparable owner occupied loans in our database.Last week, Newcastle Permanent CEO Bernadette Inglis said the move “is a continuation of our commitment to support our customers over the long term and offer some financial certainty during these uncertain times.”RELATED: Which banks have cut home loan rates following the November RBA rate cut?Despite the generous cuts to fixed rates, Newcastle Permanent has made clear that its range of variable rate home loans will remain unchanged for the time being. This has been the case for most lenders following last week’s reduction to the cash rate, with only nine lenders among the 86 we track opting to cut variable rates in line with the RBA.We’ve included an overview of the new fixed rate home loan below, but if you want to see how they stack up against other offers on the market, be sure to visit our home loan comparison page, where you’ll be able to filter your search by rate and type.
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