Borrowers are confused on what is a good interest rate
HOME loan deals are a dog’s breakfast as the gap widens on the different interest rates each borrower is paying. Here’s how you can tell if it’s a good deal.
Interest Rates
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HOME loan deals are a dog’s breakfast as the gap widens on the different interest rates each borrower is paying.
The constant massaging of interest rates by the banks has left many home loan customers confused as to what is a good rate.
Out-of-cycle rate moves in recent weeks by many financial institutions saw owner occupier loan deals increased, and the continuous moves by lenders has meant rates range anywhere from just under four per cent to more than six per cent.
IS NOW the perfect time to fix your home loan interest rate
Home Loan Experts’s managing director Otto Dargan said it was becoming more complex for mortgage customers to decipher whether they are on a competitive deal.
“Borrowers don’t know what a good rate is anymore,’’ he said.
“They’re charging more for investors, more for interest only and because of the confusion they’re better than ever at gouging their most loyal customers.”
He said any borrower with a home loan more than two years old should be contacting their bank or a mortgage broker and reviewing the deal they are on.
Analysis by financial comparison website RateCity shows on a $300,000 30-year loan the best variable rate is 3.79 per cent, while the best three-year fixed rate is 3.89 per cent.
The site’s spokeswoman Sally Tindall said there are plenty of hot deals available for borrowers particularly owner occupiers.
“For someone living in their own home you should be able to get a rate of four per cent and under for a basic no frills loan,’’ she said.
“If you are investor you are looking in the high fours.”
The big banks all declared they would be lifting their interest rates on owner occupier loans this month, except ING Direct which is the only large institution not to hike rates.
ING Direct’s head of products Tim Newman said while the mortgage market was “confusing” for homeowners, they needed to be proactive in ensuring they were on a competitive deal.
“It’s the perfect time for homeowners to check their mortgages for rates, conditions and fees and do a bit of a comparison,’’ he said.
“Many homeowners are opting to split their mortgages 50/50, fixed and variable.”
The Reserve Bank of Australia board will meet again next month and there are predictions the cash rate could drop from two per cent either in December or early next year.
sophie.elsworth@news.com.au
BEST DEALS FOR A $300,000 30-YEAR LOAN
VARIABLE
1. Mortgage House, Summer Home Loan Discount Variable 1 year, 3.79 per cent
2. Homestar Finace, Basic Refinance, 3.86 per cent
3. Reduce Home Loan, Rate Buster Offset Fee Free 3.9 per cent
4. Yellow Brick Road, Rate Smasher 3.91 per cent
5. Homestar Finance, Owner Occupied Property Loan, 3.98 per cent
FIXED
1. Greater Building Society, Ultimate Home Loan Package, 3.89 per cent
2. Newcastle Permanent, Residential Fixed, 3.89 per cent
3. Qld Police Credit Union, Residential Discount Fixed, 3.89 per cent
4. Bankwest, Complete Home Loan Package, 3.95 per cent
5. SCU, My Life Residential 3.95 per cent
Source: RateCity
Originally published as Borrowers are confused on what is a good interest rate
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