Who is still offering low-rate home loans after the June 2023 rate hike?

While the 12th increase to the national cash rate in 14 months may not yet have brought inflation down to the Reserve Bank of Australia’s (RBA’s) target band, it is reportedly affecting the borrowing power of Australia’s home buyers and refinancers.

And with one or more interest rate hikes being forecast for later this year, Australians looking to buy or refinance a home may be keen to find out what low-rate home loan offers are on the market, and which options may best suit their needs.

Which lenders are offering the lowest interest rates? 

After a hiking cycle that’s lasted more than a year with only brief pauses, it’s becoming harder to find a home loan with an interest rate of less than 5%.

Some of the lowest home loans rates found on RateCity at the time of writing include offers from:

• LCU
• The Mutual Bank
• The Capricornian
• Fire Service Credit Union
• Summerland Credit Union

Who can apply for a low-rate home loan? 

Some low-rate home loans have specific eligibility requirements – for example, you may need to have a low Loan to Value Ratio (LVR). It’s often easier to successfully apply for one of these loans when you’re refinancing an existing mortgage on a property where you hold sufficient equity, rather than saving up a much higher than average deposit on a home.

However, some lenders offer relatively low rates for first home buyers, which could help some Australians get their foot onto the property ladder. Just be sure to check the terms and conditions, as some introductory home loan discounts may only be temporary.

Keep in mind that more lenders will pass on the RBA cash rate hikes to customers as time goes on, making low-rate home loans harder to come by. Additionally, it’s important to consider more than just the interest rate when you’re taking out a home loan, whether you’re applying for your first mortgage or refinancing. A mortgage’s fees, features and other benefits can make a big difference to its total value.

What’s next for home loan interest rates?

The RBA’s cash rate hikes are putting pressure on the budgets and borrowing power of many Australian households, thanks to rising variable mortgage rates pushing up the cost of interest repayments. While inflation dipped in March 2023, it rose again in April 2023, keeping it well above the RBA’s intended target of between 2% and 3%.

It’s not certain when or if the RBA may choose to put the cash rate back on pause. Economists from the big four banks are forecasting more hikes to come, possibly in July and/or August 2023. This could put more budget pressure on struggling Australian homeowners, who may be starting to slow down their refinancing.

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