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

After a brief pause in April, the Reserve Bank of Australia (RBA) has returned to raising rates, hiking the cash rate by 25 points to 3.85%. With additional rate hikes potentially required to bring Australia’s inflation back under control, many Australian homeowners may be keen to find what low-rate mortgage deals are available.

Which lenders are offering the lowest interest rates? 

After a year-long hiking cycle with only brief pauses, home loan interest rates under 5 per cent are now some of the lowest that a borrower can realistically hope to find.

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

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

Who can apply for a low-rate home loan? 

Some low-rate home loans have specific eligibility requirements, especially around the Loan to Value Ratio (LVR). It may not be easy to successfully apply for these loans without a substantial deposit or equity in your property. This means some low-rate home loans are intended specifically for borrowers refinancing an existing mortgage, with lenders hoping that customers are prepared to jump ship in search of a better deal.

However, some lenders offer 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. The fees, features and other benefits of a mortgage can make a big difference to the total value it offers.

What’s next for home loan interest rates?

The RBA’s cash rate hikes are putting pressure on the budgets of many Australian households, thanks to rising variable mortgage rates pushing up the cost of interest repayments. While inflation was recently found to be declining, it is still well above the RBA’s intended target of between 2% and 3%.

It’s not certain whether the RBA may choose to put the cash rate back on pause for the rest of 2023. At least one of the big four banks is forecasting at least one more 25-point increase, due to arrive in August 2023. This could put more budget pressure on struggling Australian homeowners, who are already refinancing in droves.

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