The Reserve Bank of Australia’s (RBA) decision to raise the cash rate by just 25 basis points, rather than 50, at its October 2022 meeting could be a sign that there is light in the end of the tunnel for homeowners squeezed by rising mortgage repayments. But with economists predicting that interest rates could rise further before the RBA halts, it can be worth comparing home loan offers to determine if you have the best home loan for your needs.
Following the October 2022 RBA meeting, the national cash rate is now at 2.60%, which is the highest point since July 2013. As mortgage lenders pass on this rate hike to customers, it is important to look beyond the interest rate of a home loan to estimate its true value. RateCity’s Real Time Ratings™ combine the cost and flexibility of home loan offers in a simple star rating, to provide a quick and easy way to compare mortgage offers. And to quickly compare some of the top-rated home loans side-by-side, RateCity’s Home Loan Rankings ranks mortgage offers into different categories based on their Real-Time Ratings™.
(Rankings correct at time of publication. Please note that lenders may swap places on the list as interest rates and fees change and RateCity’s tracker reflects these movements.)
Some of the Best Small Deposit Home Loans
As well as affecting mortgage repayments, recent rate hikes have also affected the borrowing power of many Australians. According to research by RateCity, the average person’s maximum borrowing capacity has fallen by about 20%, or $134,500, due to the previous five interest rate hikes. This would have a ripple effect on property markets, with house prices falling in parts of Australia.
If your home buying budget is limited, there are competitive home loan deals available to borrowers with deposits as low as 5% of the property value. However, it is important to remember that the lower your deposit, the more you may have to pay in Lenders Mortgage Insurance (LMI).
Some of the Best 3 Year Fixed Home Loans
When the RBA lowered the cash rate to a record low of 0.10 in November 2020, extra-low fixed rate home loans became available. But as more of these low rate deals see their fixed rate terms expire over time, more Australians could face a bill shock when they switch back to a much higher variable rate. .
Although extra-low fixed rates are no longer available, there are still options available to borrowers who want to lock in their home loan rate and give their household budget a little more stability. Some lenders offer repayment offers and more to provide additional value to borrowers.
Some of the best home loans from the big banks
Over the past few months, Australia’s major banks have taken their time reacting to the RBA’s rate hikes. However, in October 2022, the big four banks quickly announced that they would pass the entire 25 bp rate hike on to their mortgage customers.
Other major Australian banks offer competitive mortgage deals. While you may not always be able to find the lowest interest rates on the market, you may be able to benefit from the value of other features and benefits, and in some cases cashback offers.