Tips to get a low loan rate

HOME loan interest rates are dropping below 2 per cent, but if you want them you’ll probably have to leave your existing bank. Intense competition among lenders is driving the downward push, just a year after mortgage rates first broke below 3 per cent. More lenders are tipped to cut their rates, even though the Reserve Bank is expected to keep its official cash rate steady on Tuesday. RateCity.com.au research director Sally Tindall said a new 1.98 per cent fixed rate by Homestar Finance and an introductory variable rate of 1.99 per cent by loans.com.au were only available to new customers, but many other mortgage rates were near 2 per cent. If you have a $400,000 mortgage and switch from the average owner-occupier rate of 3.28 per cent to 1.98 per cent, you could potentially save $3796 in the first year, a RateCity analysis found. “You need to think about turning yourself from an existing customer to a new customer, because these rates are not available for anyone who sets and forgets,” Ms Tindall said. Australia now has 75 lenders offering at least one fixed rate below 2.5 per cent and 10 lenders offering an ongoing variable rate below 2.5 per cent. Mortgage broker Financia’s managing director, Angelo Benedetti, said refinancing activity had surged. “People have realised with COVID that bad things can happen, and they realise they can save themselves thousands of dollars a year and are looking to do refinancing,” he said. However, some ultra-low mortgage rates came with extra conditions and borrowers might not fit their lending criteria, Mr Benedetti said.