Home News New research uncovers variances in lenders’ mortgage rates

New research uncovers variances in lenders’ mortgage rates

Font size :
Data compiled by comparison website Mozo suggests that there is a growing gap between the rates of major banks and other lenders.

Last year, the average advertised home loan rates for major banks were around 0.25 percentage points higher than other lenders, according to Mozo.

This year, with rate hikes announced by a number of banks coming into effect soon, the gap has approximately doubled to 0.53 percentage points.

With such conditions, customers should be more inclined to refinance their loans for better deals, especially if the market is as competitive as it bills itself to be. This would make the major banks rethink their prices or risk losing their market share.

Meanwhile, Aussie Home Loans said that an increase in refinancing has already occurred in recent months. While official figures have yet to confirm this, an increase would make sense given the circumstances.

According to Mozo, the average standard variable interest rate offered by lenders other than the major four is 5.08%, compared with the average rate for Commonwealth Bank, National Australia Bank, ANZ Bank and Westpac, at 5.61%.

For customers with a $300,000 loan with one of the four major banks, this means paying roughly an additional $90 monthly on mortgage payments.

Notably, most customers do not pay the standard variable rate due to the discounts they receive. Advertised rates, however, remain a good benchmark to refer to, and can help indicate a widening gap in rates.

Brian Johnson, CLSA analyst, noted that a number of small lenders (including non-banks) have not followed the rate increasing trend set by the major banks. Johnson hinted that smaller lenders have an opportunity to grab some of the major banks’ market shares.

There are more than 15 lenders offering variable interest rates 4% and lower, said Kirsty Lamont of Mozo. Many of these lenders are small and online-based and not many have increased their rates to date.

"We haven't seen any of the really sharp lenders announce any rate hikes," Lamont said.

Current customers should not expect the competition to benefit them immediately, however.

Customers will have to compare their rates to those available in the market, and then decide if they are currently getting a good deal. 

 

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

Mortgage News and Articles

Borrowers should anticipate a possible rate hike Borrowers should anticipate a possible rate hike

Some experts advise borrowers to look for a fixed loan that allows extra repayments so that they can whittle down the balance sooner Read more

Why choosing the right mortgage is hard for first-home buyers Why choosing the right mortgage is hard for first-home buyers Many feel overwhelmed by the sheer range of products and interest rates on offer, a new survey reveals ... Read more

Mortgage applications drop in second quarter Mortgage applications drop in second quarter This marks the “beginning” of a downward trend, says Equifax executive ... Read more

To break monopoly, many smaller lenders could become banks To break monopoly, many smaller lenders could become banks The proposed change could break the Big Four’s monopoly over the mortgage market and help families get cheaper home loan rates ... Read more

More mortgage news and articles

Sponsored Links

Tuesday, Jul 25, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords