RBA interest rates: Lenders continue to move as borrowers need better mortgage deals

THE Reserve Bank of Australia has kept the cash rate at 1.5 per cent but borrowers must not be complacent, as experts warn that many banks are still moving their interest rates.

MILLIONS of borrowers may be unaware their lender has moved interest rates on their loan for new customers but have failed to pass on any savings for loyal account holders.

The Reserve Bank of Australia has kept the cash rate on hold today at 1.5 per cent but industry experts are warning borrowers not to be complacent because many lenders are continuing to massage their rates.

We’ve crunched the numbers to help you make sure you are getting a competitive deal on your loan.

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VARIABLE RATES

New analysis by financial comparison website Mozo reveals on a standard $300,000 30-year home loan the big four banks have an average variable rate of 4.63 per cent and monthly repayments of $1543.

This is compared to 12 months ago when the average variable rate was 4.66 per cent and monthly repayments at $1548.

Borrowers should be reviewing their home loan rates at least once a year. Picture: iStock

But if you look at all the other lenders offering variable rates they are cheaper — the average variable rate is 4.3 per cent now or monthly repayments of $1484.

Twelve months ago this was 4.41 per cent and monthly repayments were $1504.

BORROWER BEWARE: Stark warning for home loan customers

FIXED RATES

Lenders are continuing to change their interest rates on fixed rates — just last week big banks including the Commonwealth Bank and Westpac moved many deals across both owner occupier and investor loans.

Commonwealth Bank last week changed fixed rate deals on owner occupier and investor loans. Picture: News Corp Australia

Mozo’s database shows on owner occupier principal and interest deals there’s already been four home loan products that have dropped rates while four loans that have seen rate rises this month.

On investor interest-only deals — the most common type of loan for this sort of borrower — in March there has been six rate hikes and nine rate falls.

DEMAND A BETTER DEAL

1300homeloans director John Kolenda urges all borrowers to “put their lenders on notice”.

“Look at what’s in the market, if you are not able to get your lender to come to the party definitely look elsewhere because there’s some amazing deals out by banks competing for new business,’’ he said.

“There’s some rates in the 3.8 per cent mark and some less than that.

“Do a search on and see what competitors are asking and align it to what your lender is offering and definitely put your lender on notice.”

1300homeloan director John Kolenda said borrowers need to phone their lenders and demand a better deal. Picture: Supplied

Borrowers — particularly those on variable rate deals who have the flexibility to switch lenders — should see what their institution is charging new borrowers and compare it to their loan rate.

If it’s not the same ring up and ask why.

Mozo’s database shows on a $300,000 30-year owner occupier home loan with a loan-to-value ratio below 80 per cent the cheapest variable rate offer in the market is by lender Reduce Home Loans at 3.49 per cent.

Smaller lenders Move and SCU are offering the cheapest three-year fixed deals at 3.69 per cent.

MAKE EXTRA REPAYMENTS

Mozo’s spokeswoman Kirsty Lamont said despite there not appearing to be any cash rate moves in the coming months borrowers should maximise this low-rate environment and pay down debt now.

“It’s a great time to be making any extra repayments that you possibly can and funnelling as much extra cash as you can into the loan so you can really knock that debt down,’’ she said.

“By making extra repayments now while rates are low you can lower the impact of higher rates later on.”

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