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

February 2023’s meeting of the Reserve Bank of Australia (RBA) board saw a ninth straight hike to the national cash rate. The 25-point increase took the cash rate to its highest point since 2012. While several banks have already announced they will be passing these hikes on to customers as higher interest rates, there are still some relatively low-rate options available. These could potentially help give some eligible borrowers a break from mortgage stress.

Which lenders are offering the lowest rates

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

• The Mutual
• Summerland Credit Union
• Fire Service Credit Union
• Unloan
• Bank First

Most lenders will at some point pass the latest rate rise on to their customers. RateCity’s RBA Rate Tracker can help you keep track of which lenders have announced rate hikes so far, including for their savings accounts. This could help you make a more informed decision of whether to switch lenders.

Who can apply for a low-rate home loan?

Most of the low-rate home loans on the market are reserved for the “safest” borrowers. In the eyes of banks, these tend to be existing borrowers who are refinancing their loans, rather than first home buyers.

To qualify for low-rate home loans, you’re more likely to need a lower Loan to Value Ratio (LVR), which may require you to have built up equity in your home. It may be possible for some first home buyers to apply for some low-rate home loans, but they’re more likely to require a larger deposit, or help from a guarantor.

Remember that a home loan’s interest rate is not necessarily its most important feature. It’s essential to compare not just interest rates, but fees, features and other benefits to find a loan that may suit your needs. One fast way to compare the overall value of different home loans is to compare their Real Time Ratings™ that combine their cost and flexibility into a single star rating, which is updated regularly.

How many more rate hikes are coming in 2023?

Before the February meeting, most Australian economists forecast there would be a rate hike. Some even believed that it would be the only hike for the foreseeable future, predicting that the RBA would pause its hiking cycle to step back and observe the effect of nine consecutive rate rises on Australia’s inflation.

However, in his statement on the monetary policy decision, RBA governor Dr Philip Lowe said that, “The Board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.”

With this in mind, some economists have revised their interest rate forecasts to accommodate at least two more rate rises in 2023 before the RBA pauses the current cycle. Some also believe that the RBA could choose to cut rates by the end of 2023 or at the beginning of 2024 as a means of avoiding a sharp economic downturn. 

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