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The hefty rise in home loan rates in recent weeks, particularly those on offer by the big banks, is driving increasing interest in fixed rate home loans.
November’s official cash rate rise came largely as a surprise to most Australians on Melbourne Cup Day, as did the decision by the big four banks, to increase their mortgage rates by over and above the Reserve Bank’s 0.25 per cent hike.
Since then, borrowers and aspiring buyers have been on the hunt for better deals, and according to one of the nation’s largest mortgage broking groups, fixed rate home loans are receiving increasing interest.
According to Loan Market chief operating officer Dean Rushton, the number one product the company’s brokers are currently receiving enquiries about is three-year fixed rate loans.
“The recent round of rate rises has resulted in a big jump in enquiries about fixing,” Mr Rushton said.
Indeed, for some home buyers, a fixed interest rate offers welcome security in times of rising interest rates and uncertainty.
A fixed interest rate can allow home buyers to essentially ‘set and forget’ making managing repayments easier to budget for.
In addition to considering fixed rate home loans, there are also increasing options available to borrowers who look past the traditional big banks.
Since November’s big bank rate hikes, a wave of non-bank lenders have moved to deliver home buyers an alternative, and quite compelling, offering. In addition a number of credit unions and building societies are offering much lower interest rates than the major banks.
According to Mr Rushton, a difference of as much as 1.2 per cent has emerged between the variable home loan rates currently on offer.
“The differences between lenders and the interest rates have really been amplified with the recent round of rate movements,” he said.
The truth is, while the big banks’ offering to borrowers has diluted, there is a wide range of options available to borrowers willing to shop around.
“People can achieve significant annual savings by shopping around and getting a better deal on a mortgage with a much more competitive package,” Mr Rushton says.
An easy way for borrowers to shop around is to engage the assistance of a mortgage broker. They can compare a whole range of products for you, saving you from having to spend your precious time doing it yourself.
The expertise of a good broker means they can also help you to assess the different options available – placing you in the best position to finance your property, comfortably.
Rates refer to a fixed price or an amount charged by sellers or providers for their goods and services.