Who is still offering low-rate home loans after the RBA raised rates?

In the week since the Reserve Bank of Australia (RBA) raised the national cash rate, banks and mortgage lenders have been passing on the hike by raising variable home loan interest rates. So where can you still find a low-interest home loan, and would it be worth the effort and expense of refinancing?

Who has raised interest rates?

Within 24 hours of the RBA’s announcement that the cash rate would be rising 25 basis points from 0.10 per cent to 0.35 per cent, the big four banks had announced that they would be increasing variable rates on their home loans. Many other banks and lenders have since followed suit; the full list can be found on RateCity’s RBA Rate Tracker.

The higher rates have already come into effect for a few banks, though many mortgage lenders including ANZ and NAB are holding off on enacting the announced rate hikes until Friday the 13th of May 2022.

Others are waiting until later in the month; for example, Westpac’s rate hikes come into effect 17 May 2022, while Commonwealth Bank’s are effective from 20 May 2022.

A few lenders are waiting even longer; for example, Bank of us isn’t raising its variable rate until 1 June 2022; less than one week before the RBA’s next scheduled cash rate announcement.

Who has NOT raised interest rates?

At the time of writing, very few mortgage lenders have come out to definitively state that they are NOT raising their variable rates as a response to the RBA’s cash rate decision.

For example, Homestar Finance announced early on that it would be leaving its lowest variable rate unchanged for new and existing home loan customers for as long as possible.   

There are still many mortgage lenders that are still considering their rates in light of the RBA’s decision, and a few that are yet to announce any plans. If you don’t know whether your mortgage lender plans to raise the interest rate on your home loan, consider contacting their team to find out.   

How long will interest rates stay low?

It’s looking more and more likely that Australia’s cash rate will continue to increase in the future, with RBA Governor Lowe saying that it could rise as high as 2.5 per cent, though the timeline is not yet clear. This means that variable interest rates could also keep increasing, affecting repayments on home loans, personal loans and car loans, as well as the interest earned on savings accounts and term deposits.

According to RateCity research, if the cash rate hits 2.60 per cent by August 2024, as forecast by NAB, someone with a $500,000 mortgage could see their monthly repayments rise by $675 compared to what they’re paying currently.

Before you consider switching to a different low-rate home loan, remember that the interest rate on a mortgage is only one factor to consider when selecting a home loan. It’s also important to compare the fees, features and other benefits to get a better idea of which mortgage deals may be best for you. Working out the potential cost of refinancing could also help you estimate the value a low rate loan could offer you.

One fast way to compare the overall value of different home loans is to look at their Real Time Ratings™, which combine a mortgage deal’s cost and flexibility into a single star rating. You could also consider contacting a mortgage broker for more advice of which home loans may best suit your financial situations and personal goals.

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