With plenty of market signs pointing to a potential top in the interest rate cycle, borrowers are being urged to be prepared to switch banks to save on the cost of their mortgage.
While it can be annoying, Peter White AM, from the Finance Brokers Association of Australia, said it pays to put the work in.
“Many Australians are unknowing victims of ‘rate creep’, where lenders raise rates for existing customers while offering discounted rates to new borrowers. This means you could be paying more in repayments than you should be,” he said.
Noting that brokers legally have to act in your best interest (while banks do not), engaging with one could be the easiest way to find a better deal.
“It’s a competitive lending market and many borrowers are unaware they can approach their lender and ask for a rate reduction. If the lender won’t do this – and many will not as they assume you won’t leave – ask a mortgage broker to look at the market and assess your situation and the options available,” he said.
What is a decent home loan rate right now?
According to data compiled by Canstar, here’s a breakdown of the best rates currently available. Check how yours stacks up.
Owner-occupier:
● 6.26% is the estimated average variable rate.
● 5.69% is the lowest variable rate.
● 40 lenders have a variable rate under 6%.
● 5.99% is the lowest fixed rate for a 1-year term.
Investor:
● 6.50% is the estimated average variable rate.
● 5.85% is the lowest variable rate.
● 45 lenders have a variable rate under 6.25%.
● 6.24% is the lowest fixed rate for 1- and 2-year terms.