Some of the best home loans in May 2023

The Reserve Bank of Australia (RBA) raised the national cash rate to 3.85% at its May 2023 meeting. With home loan interest rates likely to be pushed upwards by this change, it’s essential to compare mortgage deals before signing on any dotted lines.

One quick way to compare home loan offers is to look at their Real Time Ratings™ which combine the cost and flexibility of each deal into a single simple star rating, which is updated daily to help ensure accuracy. And to help you quickly compare home loans in specific categories, RateCity’s Home Loan Leaderboards rank mortgage deals by their Real Time Ratings™. 

(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.)

Some of the best variable home loans

In the lead-up to the RBA’s May 2023 meeting, three of Australia’s big four banks – ANZ, Commonwealth Bank, and Westpac – raised variable interest rates for new mortgage customers. This may be partially due to record number of refinancers putting extra pressure on the banks, combined with a sharp rise in bank funding costs.

RateCity.com.au research director, Sally Tindall, said that the big banks are being forced to roll back some of the aggressive discounting that we saw during the RBA hiking cycle.

“The record volume of refinancers is likely to be putting extra pressure on the banks, in addition to the sharp rise in funding costs, forcing them to retreat from the new customer bidding war.”

Some of the best 3-year fixed home loans

At the same time as raising variable rates, some of these banks (ANZ and Commonwealth Bank) have cut fixed rates for new customers. While locking in a home loan interest rate could appeal to borrowers looking to keep their repayments consistent in a period of uncertainty, it’s important to remember that more rate cuts could be in the pipeline over the longer term.

“Locking in a rate starting with a ‘5’ is a very different proposition to securing a rate that starts with a ‘1’ or a ‘2’,” said Sally Tindall.

“Many economists are predicting cash rate cuts in the next couple of years, with Westpac forecasting up to six cuts over the next two years. It’s no wonder many borrowers aren’t yet keen to chain their mortgage up to a fixed rate.”

Some of the best small deposit home loans

While inflation may have already peaked in Australia, the cost of living is still high and saving money can still be challenging. Australians hoping to purchase a home with a small deposit may have a relatively limited number of lenders to choose from.

Keep in mind that the Federal Government has announced an expansion of the eligibility criteria for its Home Guarantee Scheme, which allows Australians to buy property with a low deposit and pay no Lenders Mortgage Insurance (LMI). Not all mortgage lenders are participating in the scheme, so be sure to compare your options before you apply.  

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