Some of the best home loans in February 2023

Home loan interest rates are expected to rise further this year as the Reserve Bank of Australia (RBA) returns from its January break to meet about monetary policy. But if the cash rate could be approaching its peak, what could that mean for Australia’s home loans?

Many economists are agreeing that a 25-point hike to the national cash rate should be announced when the RBA board meets on 7 February 2023. The question is whether the RBA will follow this up with additional rate hikes, or inflation could start falling enough for the RBA to consider pausing the current hiking cycle. Some economists are even forecasting that the RBA could consider cutting the cash rate in late 2023 or 2024, which could provide some relief for mortgage holders.

In a time of rising rates and high costs of living, it’s important to carefully compare your home loan options. RateCity’s Home Loan Leaderboards can help you to quickly compare home loans by ranking mortgage deals in different categories by their Real Time Ratings™. These ratings combine the cost and flexibility of each mortgage deal into a simple star rating, which is updated daily to help ensure improved accuracy.

Some of the best variable home loans

With rates rising and set to rise further, many Australians who took out record-low fixed rates a couple of years ago are getting nervous. When their fixed term expires and they revert to a variable rate that’s seen multiple consecutive hikes, they could be hit hard by bill shock and mortgage stress.

Many banks and mortgage lenders are encouraging Australians to refinance to a lower interest rate by offering discounted interest rates, cashback offers, and more. It’s important to compare the different options available before you refinance to make sure you’re switching to a deal that suits your financial situation and personal goals.

Some of the best 2-year fixed home loans

Borrowers coming off low fixed rates may not be keen on reverting to a variable rate, which could rise further if the RBA hikes the cash rate higher. An alternative could be to take out another fixed rate home loan and lock in consistent repayments for a few more years.

Keep in mind that today’s fixed interest rates aren’t the ultra-low fixed rates of a few years ago, and borrowers may still need to revise their household budgets to afford the repayments. And if the RBA ends up cutting the cash rate in the future, you may not benefit from lower variable rates if you’re still locked into a fixed rate deal.

Some of the best small deposit home loans

First home buyers may have heard that property values around Australia have been falling in response to the multiple rate hikes. However, that doesn’t mean it will be easy to snap up a cheap property – higher interest rates could make it more challenging to afford the repayments on a home loan, which could limit your borrowing power.

Buying with a deposit of 10 or even 5 per cent of the property value is possible, though you may be charged for Lenders Mortgage Insurance (LMI) unless you’re applying with the assistance of a government program or a guarantor.

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