Bet each way on rate moves
Interest rates are rising and falling as lenders fight for new customers, writes IT’S the great rates race, and millions of Australian mortgage customers risk being left behind.
Variable home loan interest rates are moving in both directions as lenders jostle for position, making now more important than ever to check your mortgage.
Research by comparison website Mozo.com.au found that more than a dozen smaller and mid-sized lenders increased variable rates last month, following the lead of major banks Westpac, ANZ and the Commonwealth Bank.
However, a handful of lenders announced variable rate cuts, including HSBC, online lender Tic Toc,and CommBank, which lowered its basic variable home loan by a quarter of a percentage point to 3.89 per cent.
Mozo director Kirsty Lamont said the rate cuts indicated that competition was heating up as the mortgage market cooled down.
“You could be forgiven for thinking lenders have the yo-yo out on rates at the moment,” she said.
“We are seeing some lenders make tactical offers to attract the right buyers, typically owner-occupiers with low loanto-value ratios.”
Lenders were falling over themselves to sign up owner- occupiers who had built at least 20 per cent equity in their homes, Ms Lamont said.
“Check your loan-to-value ratio and if it’s 80 per cent or below, start comparing rates and push for a better deal,” she said.
Ratecity.com.au director of research Sally Tindall said a national slowdown in mortgage growth was forcing many lenders to aggressively chase new business, while others were lifting interest rates.
“It is a very unique time in the home loan market,” Ms Tindall said.
She said CommBank had been cutting rates to get new customers through the door, but “their offer was only for new customers”.
“Now is the most important time to take stock of your home loan,” Ms Tindall said.
Borrowers should check if their lender was offering a lower mortgage interest rate to new customers, she said.
“If it’s lower, call them up and ask them to match it. If they don’t match it, start considering refinancing.”
Other lenders are finding new ways to deliver record low mortgage rates.
RateCity has facilitated a one-week deal between Reduce Home Loans and Getcreditscore.com.au to drop Reduce’s 3.44 per cent variable mortgage rate to 3.39 per cent for people with excellent or very good credit scores.
Ms Tindall said that the idea stemmed from Australia’s new comprehensive credit reporting regime.
“Finally the banks are passing on people’s full history to credit agencies, and people now can more proactively improve their credit score. Events like this are good for people with good credit scores.”