Consumers have been reminded to be on the lookout for the best deal on their mortgage following the Reserve Bank’s decision this week to leave the official cash interest rate on hold.
While the RBA made no change to the current 2% cash rate, analysis from a mortgage comparison firm has shown that interest rates
levied by lenders on home loans are still decreasing as competition in the sector increases.
According to RateCity, variable rates are available as low as 3.79%, while a number of lenders are offering one or two year fixed rates below 4%.
“Whether it’s variable or fixed, rates are at historic lows and buyers will end up ahead if they make the most of the competition in the marketplace,” RateCity’s money editor Sally Tindall said.
“Five-year fixed rates are now, on average, 0.86% than 18 months ago, so if you prefer the security of a fixed rate, now could be a good time to consider one,” she said.
Tindall also again warned consumers to consider the long term benefits, rather than be swept away by introductory offers.
“The highly publicised ‘spring season’ has seen some pretty incredible one-off offers – NAB is offering 250,000 frequent flyer points for new owner-occupier loans – but it’s important to crunch the numbers before taking these type of deals up,” she said.
“Often, securing a lower interest rate will leave you thousands of dollars ahead rather than a special offer that lasts for a limited time.”
While lenders are facing stiff competition from one another, recent changes have resulted in tighter lending criteria.
“Lenders are cracking down on risky borrowing, so buyers will need to live in their own home with a deposit of at least 20 per cent,” Tindall said.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan