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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One week on from the Reserve Bank’s November rate cut, ING has announced that it will be reducing rates on a number of its fixed home loans by between 5 and 60 basis points.
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Whether you’re considering your first home loan or well into paying off a current mortgage, recent interest rate reductions could impact you. But it does depend on the type of home loan you’ve taken out and with which lender.
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With housing prices and rental yields on their way back up, many Australians are keen to snag a piece of the investment property market pie. In fact, 26% believe now is the best time to invest, according to recent ING research. But if you’ve been struggling to raise the standard 20% deposit, the big question for you may be whether it’s a good idea to climb the property ladder with as little as 5% saved up. Let’s take a look at the pros and cons.
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It’s been three days since the Reserve Bank reduced the official cash to a new low of 0.10%, yet the response from home loan lenders could be described more as trickle than a flood.
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If saving money on your home loan in 2021 is what you’re after, then you've come to the right place. Discovering a great value home loan could mean the difference between tens of thousands of dollars saved in interest over the course of your loan, but in practice it can be hard to find the best option amongst the dozens of different lenders and rates on the market.
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