Some of the best home loans in October 2021

With the Reserve Bank of Australia (RBA) committing to keep the cash rate on hold for the next few years, and mortgage lenders continuing to slash interest rates, regulators are taking steps to limit risky borrowing and cool overheated property prices.

With this in mind, it’s more important than ever to compare mortgages before buying a home or investment property, to work out which options may best suit your financial situation.

To help make comparison quicker and simpler, RateCity’s Leaderboards rank home loans in different categories based on their Real Time Ratings™, which combine their cost and flexibility to better showcase their overall value.

(Rankings are correct at the time of publishing. Please note lenders may trade places on the list as interest rates and fees change and RateCity’s tracker reflects these movements.)

Banks expected to raise floor rate

By the end of October, the Australian Prudential Regulation Authority (APRA) will expect banks to have increased the rate at which they stress test mortgages from 2.5 per cent to 3 per cent. When assessing home loan applications, these banks will have to calculate whether a borrower could still afford their repayments if their rates rose by 3 per cent, or to the bank’s current ‘floor rate’, whichever is higher. 

While the new 3 per cent buffer rate does not yet apply to non-bank lenders, APRA is understood to be considering including them later this year.

Some of the best home loans from large banks

Your borrowing power may drop

Based on RateCity research, the average family’s maximum borrowing capacity could drop by $35,025 under these new serviceability buffer rules.

While these rules are intended to help protect people from taking on risky levels of debt, they could also make things more challenging for first home buyers, who typically have lower incomes and smaller deposits. Last year, one in ten first home buyers utilised government support programs, such as the First Home Loan Deposit Scheme and the New Home Guarantee, to get their foot onto the property ladder.

Some of the best small deposit home loans

Fewer new home loans, but loan sizes are increasing

The APRA changes follow the recent release of statistics showing that new lending to owner occupiers has been stalling, while mortgage sizes have been ballooning.

RateCity analysis of figures from the Australian Bureau of Statistics (ABS) indicate that the number of owner-occupiers first-home buyers is down 22.8 per cent since the peak in January 2021, while the average new loan in NSW and Victoria has risen by more than $100,000 in just a year.

Some of the best variable home loans for over $1 million

Compare home loans in Australia