The Reserve Bank of Australia again raised their cash rate in August 2022 to now 1.85% leading to an adjustment for home lending mortgage rates from lenders. While it can be seen as with previous rate rises, mortgagees tend to complain but no take action on spiralling interest rates, and potentially cost themselves thousands a year in additional repayments. While there are costs involved in moving mortgages to another lender, this can be offset by cash back specials, and also ensuring the new rate is at a genuine and true discount from the current rate. Below are some of the current rates and specials as at 10th August 2022.
Variable Owner Occupier Mortgage Rates
Looking at owner occupier rates there are still some excellent choices, and much competition under the 3.3% rate. Assuming at least a 20% deposit or equity (80% LVR) some rates can be as low as around 3.19% with further discounts for more than 30% deposit/equity loans. This is for principal and interest and assuming for clients with a good repayment history and clear good credit score.
Fixed Owner Occupier Mortgage Rates
Fixed rates had recently increased at a great rate than variable though some easing has occurred in the 4-5 year fixed rate markets. Looking at similar LVRs to variable, fixed rates for 12 months are around the 4.5% market retail rate. Discounts can also apply for greater than 30% equity/deposit loans. Fixed for 3 years are nudging up towards the 5.3% area, with 2 year fixed roughly between the 1 year and 3 year fixed rates.
Investment Mortgage Interest Rates
Generally investment rates are more expensive than owner occupier loans. Currently there are lender specials around the 3.5% area, with interest only options adding around a 0.3-0.5% premium on the rates. Certain lenders do cap the LVR so it is always best to consult a mortgage broker to run the numbers and see the difference in rates vs deposit, so it can be calculated whether to put the money into a lower LVR loan, or pay a slightly higher rate, and retain more funds post settlement.
Cash Back Mortgage Offers
As well as interest rates, cash back offers can also assist in determining whether a refinance is beneficial. Sometimes the saving on interest rate may only be slight, however adding in cash back components can make the transition more financially suitable. Currently there are lender specials up to $6K cash back with full terms and conditions available on request. This can be weighed up against loan balance, to work out whether the lowest rate with no cashback, or a slightly higher rate but with cash back, is of more benefit.