New home loan to track official cash rate
New-Loan has launched Australia’s first variable home loan that will track the cash rate for the first three years from settlement.
The Cash-Rate Linked Loan, which will have a starting interest rate of 7.25 per cent, will move up and down in price in line with the Reserve Bank’s cash rate movements.
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In addition to this feature, the new loan also boasts no entry or exit fees other than standard external valuation and legal fees.
The company’s executive director Mark Flack said Firstfolio, parent company of New-Loan, had seen a dramatic increase in the number of enquiries from customers considering refinancing to protect themselves against further rate rises by the big banks.
“With further potential rates in the next 12 months there is growing amount of customer uncertainty around the movement of home loan rates and their relationship to RBA cash rate,” he said.
“We decided it was possible to offer a transparent home loan product that was linked to the RBA cash rate and today released the New-Loan Cash Rate Linked Loan. This flexible home loan with all the major features will provide new New-Loan customers with certainty, very competitive pricing and all the features of a standard home loan.
“Our aim is to ultimately bring a product to market that is linked to the RBA cash rate for the life of the loan. We are actively exploring new options to achieve this outcome.”
