Yahoo Finance Last chance to save as the mortgage war comes to an end
Aussie mortgage holders who want to save money need to act fast
For those still mulling over switching mortgages to save money, there is no time to lose. While there is lots of talk about Aussie borrowers being stuck in a mortgage prison, there has, in fact, been a fierce battle for your mortgage business. But now the mortgage war is coming to an end.
Over the past few years since the onset of the pandemic, business dried up when buyers disappeared then surged again when liberated out-of-town or interstate borrowers flooded back into the market in search of a new lifestyle. Even now, since official interest rates have risen, they have been desperately defecting to new home loans.
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Through it all, lenders waived application fees, offered cashbacks aplenty and in some cases, even handed out enormous interest rate discounts. So, what has changed?
Why your mortgage application is now urgent
Almost $289 billion worth of loans have been refinanced since the shock interest rate hike-cycle began last May, as borrowers moved to secure repayment relief. Aussies ditched their lenders to the tune of $21.5 billion in the latest month for which we have records (July) in a result that eclipsed the high of just over $21 billion set in March.
Comparison site Ratecity believes the fresh refinance rush is likely to have been exacerbated by the end of cashback deals from Westpac and NAB. To lock these in, customers were required to submit their forms by June 30, with many of these applicants accepting their offers in July.
It’s possible the hundreds of thousands of borrowers coming off their fixed rates also contributed to this record high. Because that’s one thing happening: those cash back deals, previously up to $5,000, are drying up.
On the rate front, with rises since May last year adding $1,381 to the average now-$593,475 loan, the only ticket to saving – for anyone – is to slash that starting rate. However, now lenders are increasing these for new customers as it starts to look more likely that we are at the top of the interest rate cycle.
Lenders are increasing these [rates] for new customers as it starts to look more likely that we are at the top of the interest rate cycle.
Spokesperson for datahouse Mozo, Rachel Wastell, told Yahoo Finance: “We are likely at or near the peak of the aggressive hiking cycle that started last year, so lenders are likely looking to rebuild net interest margins before rates start to come down again.”
“In terms of the big discounting, it looks like the strong competition we've seen in the market over the past 18 months is likely coming to an end, with interest rates on home loans rising and cashback offers decreasing.” So, how can you still play this to win a rate reprieve?
How much you could save today
The good news is that, though the window of interest saving opportunity is closing, there is absolutely time to sneak through. While the Reserve Bank discounted rate is 7.06 per cent, according to its latest figures, the best-in-market is 5.69 per cent. If I don’t yet have your sit-bolt-upright attention, that means that for the average $593,475 loan, it gives a monthly saving of $505, a yearly saving of $6,062 and a $151,560 savings total you keep your home loan over the full 25 years.
Here is where you can get that market-beating 5.69 per cent… and how it compares with the more conventional lenders. Note these are quality, comparable lenders to the Big 4 because they are backed by authorised deposit-taking institutions. As I said at the start, you have no time to lose.
Top 5 Variable Rate Home Loans (with offset, ADI backed only) | |||
Provider | Product | Variable Rate | Comparison Rate |
Tic:Toc | Variable Home Loan (Owner Occupier, Principal & Interest) | 5.69% | 5.70% |
Bendigo Bank | Express Home Loan (Owner Occupier, Principal & Interest, LVR <90%) | 5.72% | 5.87% |
Bank of Sydney | Expect More No Annual Fee Home Loan (Special, Owner Occupier, Principal & Interest, LVR<80%) (Package) | 5.79% | 5.81% |
Community First Bank | Accelerator Home Loan (Owner Occupier, Principal & Interest) (Package) | 5.79% | 6.15% |
Easy Street | Street Smart Variable Home Loan (Principal & Interest) | 5.79% | 5.84% |
Source: mozo.com.au as at 27 September 2023, leading variable rates for owner occupier, principal & interest home loans at $400,000, 80% LVR, with offset, providers backed by ADI only. | |||
Big 4 Standard Variable Rate Home Loans (with offset at 80% LVR) | |||
Provider | Product | Variable Rate | Comparison Rate |
ANZ | Standard Variable Rate (Owner Occupier, Principal & Interest, LVR <80%) | 6.99% | 7.00% |
Commonwealth Bank | Standard Variable Rate (Owner Occupier, Principal & Interest) | 8.55% | 8.70% |
NAB | Tailored Home Loan (Owner Occupier, Principal & Interest, LVR <95%) | 7.52% | 7.60% |
Westpac | Rocket Repay Home Loan (Principal & Interest, 70-80% LVR) | 8.58% | 8.71% |
Source: mozo.com.au as at 27 September 2023, leading variable rates for owner occupier, principal & interest home loans at $400,000, 80% LVR, with offset, providers backed by ADI only. | |||
Other Big 4 Home Loans (with offset) | |||
Provider | Product | Variable Rate | Comparison Rate |
Commonwealth Bank | Standard Variable Rate (Owner Occupier, Principal & Interest, LVR <80%) (Wealth Package) | 6.44% | 6.81% |
Westpac | Rocket Repay Home Loan (Principal & Interest, 70-80% LVR) (Premier Advantage Package) | 7.29% | 7.63% |
Source: mozo.com.au as at 27 September 2023, leading variable rates for owner occupier, principal & interest home loans at $400,000, 80% LVR, with offset, providers backed by ADI only. | |||
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