Now that were well into 2014 time to look at your home loan!
The reason being there is a variance of almost 3 per cent, on interest rates across the major lenders.
As ever the cheapest rate is not necessarily the best, you will need to carefully assess your own financial situation in its entirety, compare fees and charges and see what other facilities are on offer from your lender – such as a redraw facility or mortgage offset account. Only in this way will you understand the true cost of any mortgage.
The big four banks still hold the majority of home loans with an average discounted variable rate of 5.29 per cent. New players in the market, such as Bank of Sydney, Police Bank, Police Financial Services Limited and Woori Bank are challenging this, despite only holding a tiny per cent of the home loan market. If they make significant inroads into the traditional territory of the big four the mortgage landscape ahead will become very interesting indeed.
Reflecting nervousness about the current economic environment borrowers are going for certainty over lower rates, with the perceived security of fixed-rate home loans a new emerging trend. This was dramatically seen at the end of 2013 with demand for these loans climbing in almost every state; demand for fixed rate products has not been this high since March 2008. Despite this, variable rate home loans continue to rule and in December 2013 they accounted for almost 67 per cent of all new home loans.
I personally just re-looked at my loans and negotiated the following rates:
- 4.89% fixed home loan, with 1 of the 4 major banks
- 5.1% variable rate, with 1 of the 4 major banks
Remember the banks are still desperate for business so ask to give you a better rate or walk.
The information provided in this article is of a general nature only and in no way constitutes legal or professional advice, or specific advice in relation to any finance. In all cases we recommend you receive professional financial advice for your own personal circumstances.