Interest rates are on hold again: RBA governor

THE gap between the best and worst interest rates means many homeowners are paying more than they need to on their loans, new research claims.

THE whopping gap between the best and worst interest rates means many customers could be paying far more than they need to on their loans, new analysis shows.

The Reserve Bank of Australia board met for the first time today and unsurprisingly governor Philip Lowe kept the cash rate on hold at 1.5 per cent.

Reserve Bank of Australia governor Philip Lowe has kept the cash rate on hold at 1.5 per cent. Picture: Supplied

ARE interest-only owner occupier loans a bad idea?

However many home loan customers remain complacent with their loans and are paying minimum attention to the ever-moving mortgage market.

Consequently this could be biting their hip pockets.

New data from financial comparison website Canstar has found on a $300,000 30-year home loan the rates vary far and wide.

Here are the differences:

Standard variable loan

Minimum rate: 3.35 per cent. Monthly repayments: $1322

Maximum rate: 5.73 per cent. Monthly repayments: $1746

Monthly repayment difference: $424

Before signing up to a home loan make sure you understand the fees and charges that apply.

1-year fixed loan

Minimum: 3.39 per cent. Monthly repayments: $1328

Maximum: 5.04 per cent. Monthly repayments: $1617

Monthly repayment difference: $289

3-year fixed loan

Minimum: 3.59 per cent. Monthly repayments: $1362

Maximum 5.05 per cent. Monthly repayments: $1619

Monthly repayment difference: $257

Canstar spokeswoman Belinda Williamson said borrowers should be hunting for home loan interest deals that start with a “3” and also scrutinise the features of their loan.

“Make sure you’re not paying for things you don’t or won’t use, for example you may be well suited for a loan with all the bells and whistles such as redraw facilities and access to an offset account,” she said.

“But keep in mind you’ll be paying more for the privilege so weigh up the cost versus benefit.”

Tribeca Financial’s chief executive officer Ryan Watson agreed owner occupier loans should have a “3” in front of their interest rate and for investment loans borrowers should be paying below 4.25 per cent.

Tribeca Financial chief executive officer Ryan Watson urgers borrowers to check up on what home loan interest rate they are paying and take action if they can get a cheaper deal.

“If you have been with the same bank for three or more years with your current home loan, you will almost certainly be paying 0.50 per cent or more on your interest rate than you need too,’’ he said.

He believes using a mortgage broker can help borrowers score much better deals including a cheaper interest rate and better customer service.

@sophieelsworth