The RBA dust settles...Top home loan deals available now
The big news this month was the Reserve Bank slashing the official cash rate to 1.50%. Understandably, Aussies with a home loan or looking for one were stoked. I mean, hey it’s the first time the rate has ever been this low in the last 50 years, so it’s cause for celebration.
But, just because the RBA says rates should go down, doesn’t mean lenders will follow suit. That’s why I’ve waited a few weeks to write up this article, playing the waiting game and seeing what lenders will do - play nice and pass on the full 25 basis points or naughty by failing to pass it on in full or at all.
Well now the dust has settled, with the majority of lenders finally announcing their rate changes. Here’s a snapshot of what happened post RBA:
- 39 out of 83 lenders have announced rate cuts so far
- Just 5 providers passed on the rate cut in full
- The remaining 34 opted for rate reductions between 10bp and 15bp
- All four big banks failed to pass on the full 25 basis points
- The average time for the cuts to take affect was 14.7, around 2 days less than the May RBA rate cut
So now that the home loan market has had a shake up, where are the best mortgage deals to be found?
Check out the table below to see how some of the top deals currently in the market, compare against the new big 4 average:
|Home loan||Interest rate||Monthly repayment on a $500k loan||Interest paid over 25 years|
|New average big 4 variable rate once RBA rate changes take effect||4.65%||$2,822||$346,571|
|loans.com.au Fast Forward||3.49% (3.90% comparison rate)||$2,500||$250,131|
|ING DIRECT Orange Advantage||3.67% (3.89% comparison rate)||$2,549||$264,681|
|Bank Australia Basic Home Loan||3.73% (3.74% comparison rate)||$2,565||$269,565|
|UBank UHomeLoan - Offer||3.74% (3.74% comparison rate)||$2,568||$270,381|
|State Custodians Standard Variable||3.74% (4.07% comparison rate)||$2,568||$270,381|
Top fixed rate deals
1 year - 3.59% - Greater Bank
2 year - 3.69% - Newcastle Permanent
4 year - 3.74% - Greater Bank
5 year - 3.74% - Greater Bank
Top things to consider when making the home loan switch
Did any of the above deals catch your eye? Well if you’re currently signed up with a home loan and are thinking about refinancing, before you do, take a moment to consider the following...
1. The potential savings to be made. Take your current rate, take one of the rates above and enter them into Mozo’s comparison calculator. That way you’ll see what the lower rate will save you in monthly repayments and over the term of the loan and ultimately help you decide whether switching is financially worth it.
2. The refinancing fees. If you do find that there’s potentially a small fortune of savings waiting for you, then you’ll need to have the cash at hand for the refinancing costs. Some of these fees include a discharge fee from your current lender and upfront fees from the new one like the home loan application fee and property valuation charge. Generally speaking (if your LVR is less than 80% and you are not switching during a fixed rate term) the savings from refinancing should far outweigh these costs.
3. The flexibility of the home loan. No matter how low the rate of a home loan, if it doesn’t come with the features you’ll need, it’s probably not the right mortgage package for you. For instance, when I recently took out a home loan I was willing to have a rate a few percentage points higher to gain access to a 100% mortgage offset account. So before you refinance have a think about the type of features you’ll need in your home loan, to ensure you sign up with the best possible one for you.