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

The Reserve Bank of Australia (RBA) has raised the national cash rate at every one of its last ten meetings, taking it from the record low of 0.10% to 3.60% in March 2023 - the fastest hiking cycle in decades. With banks and mortgage lenders passing this increase on to home loan customers, mortgage rates starting with a 4 are becoming much harder to find, though a small number may still be available.   

Which lenders are offering the lowest interest rates? 

While interest rates of under 4% were once considered some of the lowest around, the current hiking cycle has made it much harder to find home loans with rates of under 5%.

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

• Summerland Credit Union
• Fire Service Credit Union
• Gateway Bank
• The Mutual Bank
• Bendigo Bank (may rise from 17 March 2023)

Who can apply for a low-rate home loan? 

While first home buyers may be able to apply for some low-rate home loans, these mortgage deals often require a low Loan to Value Ratio (LVR), meaning it may be harder to qualify without a substantial deposit. 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.

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.

When is the rate pause coming?

It’s coming up on 12 months of consecutive increases to the national cash rate, interrupted only by the RBA’s January break. Combined with the current cost of living crisis, Australia’s mortgage holders have been under increasing financial stress.

Economists from Australia’s big banks are forecasting that the RBA could choose to pause its hiking cycle soon, which would allow the past hikes to take effect on inflation and help limit the risk of the Australian economy ending up in recession. 

This pause could begin from May or June 2023, and may be followed in time by the RBA choosing to start cutting the cash rate once again. This could take place in later 2023 or some time in 2024, though it will depend on whether inflation starts to finally fall into line with the RBA’s target band of 2% to 3%.

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