The Reserve Bank of Australia (RBA) will meet again early next month to make its next decision around the nation's cash rate.
The cash rate significantly influences the interest rates lenders charge borrowers, which in turn affects the monthly budgets of millions of Australians.
In May, the average home loan officially surpassed $626,000, while the typical variable interest rate on a new home loan was 6.3% p.a., according to figures from the Australian Bureau of Statistics and the RBA.
Combining those two data points suggests the average borrower taking out a 30-year home loan in May is facing monthly repayments of nearly $3,900.
Those repayments could rise to around $4,000 if the cash rate were to be hiked another 25 basis points, and lenders were to pass the increase on in full – a $1,200 a year difference.
Wondering how your repayments could change if rates were to rise? Your Mortgage's home loan repayments calculator can help.
This underscores the importance for borrowers to secure a good home loan deal, especially in the current high interest rate environment. Keeping an eye on the mortgage market is crucial for both new borrowers and potential refinancers.
On that note, here are this week's market movements.
G&C Mutual lifts near-market leading special offer rates
Customer owned bank G&C Mutual hiked the special offers it advertises for first home buyers and refinancers by as much as nine basis points.
First home buyers with loan-to-value ratios (LVRs) as high as 80%, or 95% with lenders mortgage insurance (LMI), can now realise a rate of 5.99% p.a. (comparison rate* 6.02%)
At the same time, the special offer rates available for those refinancing to its Momentum home loan product were hiked to:
|
Product (special offer for refinancers) |
LVR |
Change |
New rate (p.a.) |
Comparison rate* (p.a.) |
|
Momentum Home Loan |
≤60% |
+9bp |
5.99% |
6.02% |
|
Momentum Home Loan |
60-80% |
+9bp |
6.09% |
6.12% |
|
Momentum Home Loan |
80-95% |
+9bp |
6.19% |
6.22% |
Australian Unity hikes variable rates
If you're in the market for a variable rate home loan, you might be interested to learn that Australian Unity has adjusted the rates for both its basic and packaged home loan options.
It hiked the interest rates on its Kick Starter product by up to 5 basis points and those on its Health Wealth Happiness product by up to 20 basis points.
The latter home loan offering comes with a higher rate but includes an offset account among other benefits.
When it comes to investors, the bank's Wealth Builder product saw rates rise by 5 basis points.
It's important to note that new borrowers signing on with the bank are eligible for the discounted interest rates listed below.
Here are the specific changes for new owner-occupied borrowers making principal and interest repayments:
|
Product |
LVR |
Change |
New rate (p.a.) |
Comparison rate* (p.a.) |
|
Kick Starter |
≤70% |
+5 bp |
6.18% |
6.18% |
|
Kick Starter |
70-80% |
+5 bp |
6.23% |
6.23% |
|
Kick Starter |
80-90% |
+5 bp |
6.49% |
6.49% |
|
Health Wealth Happiness |
≤70% |
+20 bp |
6.33% |
6.33% |
|
Health Wealth Happiness |
70-80% |
+20 bp |
6.39% |
6.39% |
|
Health Wealth Happiness |
80-90% |
+20 bp |
6.59% |
6.59% |
Investors new to the bank making principal and interest repayments may find these updated rates pique their interest:
|
Product |
LVR |
Change |
New rate (p.a.) |
Comparison rate* (p.a.) |
|
Wealth Builder Investor |
≤70% |
+5 bp |
6.54% |
6.58% |
|
Wealth Builder Investor |
70-80% |
+5 bp |
6.59% |
6.63% |
|
Wealth Builder Investor |
80-90% |
+5 bp |
6.84% |
6.88% |
Police Credit Union increases fixed rates
Police Credit Union also upped interest rates this week, increasing fixed home loan rates by as much as 30 basis points.
The mutual bank offers its financial products to the general public, not just police officers. Though, police officers and certain other essential workers are eligible for a 10 basis point interest rate discount on some of the bank's home loans.
The latest changes to the lender's owner-occupier home loan lineup for those with LVRs of 80% or less include:
|
Fixed period |
Change |
New rate (p.a.) |
Comparison rate* (p.a.) |
|
1 year |
+20bp |
6.09% |
7.40% |
|
2 years |
+20bp |
6.09% |
7.26% |
|
3 years |
+20bp |
6.09% |
7.14% |
|
4 years |
+20bp |
6.19% |
7.06% |
|
5 years |
+20bp |
6.19% |
6.97% |
For investors with LVRs of 80% or less, its new rates are:
|
Fixed period |
Change |
New rate (p.a.) |
Comparison rate* (p.a.) |
|
1 year |
+20bp |
6.19% |
7.41% |
|
2 years |
+20bp |
6.19% |
7.28% |
|
3 years |
+20bp |
6.19% |
7.17% |
|
4 years |
+20bp |
6.29% |
7.10% |
|
5 years |
+20bp |
6.29% |
7.01% |
New offering from loans.com.au
Finally, loans.com.au made waves this week when it launched bridging loans.
A bridging loan is a financial solution for those buying a new property before selling their existing one.
loans.com.au's newest product features interest-only repayments, currently advertises an interest rate of 7.75% p.a. (comparison rate* 6.31% p.a.), and is available for those with an LVR of 80% or less.
Additionally, the lender ceased offering cashback to home loan refinancers this week.
Previously, those with a home loan worth between $250,000 and $700,000 who refinanced to the lender could receive a $2,000 cash reward for doing so, while those with larger mortgages could receive as much as $4,000.
The non-bank is just the latest lender to halt its cashback temptation, following in the recent footsteps of three of the big four banks, among others.
Image by Aleksandr Popov on Unsplash
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