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Home loan rates going up: What you can do to dodge the bullet
Cherie Mildwater lifts the lid on some recent findings by RateCity regarding interest rate hikes on home loans.
March 29, 2010
We all are aware of interest rates and the effect that their changes have on the economy and more importantly on our bank balances. But did you know that each month interest rates are constantly changing, and most of the time we are unaware of it even happening?
These rate movements are a result of the economy and the effect it has on the cash rate. RateCity recorded over 3,500 home loan interest rate changes in February alone this year. If you were to break that down to a daily figure, it would equate to 125 changes per day. And compared to January 2010, there were more than 4,000 rate changes to home loans.
March is forecasted to be a record month for rate movements says RateCity’s CEO, Damian Smith, “March is expected to be a frenzy of both lender and borrower activity according to our research, as lenders put their brakes on in February of interest rate movements.”
Smith suggested that mortgagees are getting ready for the next rate rise by watching their home loan closely. “Borrowers also held their breath for a rate rise last month as we saw a plateau of applications for home loans on Ratecity.com.au in February.”
RateCity found that interest rates on more than 200 standard variable home loans have increased by 1.22 percent since July 2009 compared to the Reserve Bank’s 1 percent cash rate rise since October 2009.
RateCity also revealed that on average, standard variable home loan rates are 2.31 percent higher than the cash rate. And compared to the spread between the average standard variable rate and the cash rate, which is 1.75 percent below the average standard variable rate for the last two years.
With each interest hike, Australians are growing more financially aware when it comes to their mortgage. We continually seek and investigate ways on how to save money on our home loans, and by comparing mortgage lenders at financial comparison websites.
For example, you could save more than $2,000 per year or over $51,500 over a 25-year period for a $300,000 loan by comparing RateCity’s top variable home loan rates of under 6.00 percent to the benchmark standard variable rate (the average of the four major banks).
“Borrowers are getting savvier for market leading home loans as we have greater access to the internet and awareness to websites like RateCity where Australians can search, compare and apply for thousands of financial products. And with the latest cash rate rise, there is no doubt even more borrowers will look to the internet to save themselves potentially thousands of dollars,” says Smith.
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Disclaimer
This article is over two years old, last updated on March 29, 2010. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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