RBA hikes coming – what are the lowest home loan rates on offer?

The RBA has left the cash rate on hold this month, at 0.10 per cent, but interest rate hikes are coming.

The big four bank economists are forecasting the cash rate increases could begin between June and September.

While anyone on a fixed rate has bought themselves temporary immunity to any rate hikes, variable rate mortgage holders are about to get hit.

Haggling with their lender now or refinancing could help minimise the impact of the rate rises ahead.

What is a decent variable home loan rate?

New RBA data out today shows the average existing owner-occupier variable rate mortgage customer is on an interest rate of 2.92 per cent.

That’s significantly higher than what’s currently on offer.

RateCity.com.au variable rate analysis:

• 64 variable rate loans available from 33 lenders under 2%.
• 1.79% is the lowest variable rate for owner-occupiers - available from 3 lenders.
• 2.17% is the average big four bank lowest variable rate; 0.53% lower than it was a year ago.
• 38 lenders have cut at least one variable rate for new customers in the last 2 months - including all big 4 banks.

RateCity.com.au fixed rate loan analysis:

• 6 fixed rate loans available from 4 lenders under 2%.
• 144 fixed rate loans available from 35 lenders under 2.5% (mostly 1-year fixed).
• 3.34% is the average big four bank 2-year fixed rate for owner-occupiers (P&I); 1.42% higher than a year ago.
• 91 lenders have hiked at least one fixed rate in the last 2 months.

RateCity.com.au research director, Sally Tindall, said: “The government’s pre-election cash-splash adds another variable into the mix, however, it’s unlikely to derail the RBA’s desire for more data before making a decision”.

“The next CPI data is out at the end of this month, but it’s hard to see the RBA making a move on the back of this alone,” she said.

“The RBA does not want to spring a rate hike on Australians without ample warning. 

“However, even with plenty of notice, interest rate rises will still come as a shock to many Australians.

RateCity.com.au analysis of the CBA rate forecasts shows someone with a $500,000, 25-year owner-occupier loan would see their monthly repayments rise by an estimated $303 by February next year, if the cash rate hits 1.25 per cent.

“Don’t just wait around for rates to rise, act now to help get yourself into a better position before the hikes start,” Sally Tindall said.

“Most banks passed on next to nothing to their existing variable rate customers when the RBA made its last two cuts in 2020. However, variable rates have been tumbling for new customers in the last year.

“There are 33 lenders offering variable rates under 2 per cent and all big four banks have cut their lowest variable rate mortgages in the last two months.

“Your current lender probably doesn’t want to lose you, so may be willing to give you a discount to keep your business.

“Pick up the phone and haggle with your bank, if you don’t ask, you don’t get,” she said.

Big four bank - lowest home loan rates

Source: RateCity.com.au Note: Some loan-to-value ratio requirements apply.

Lowest variable rates on RateCity

Source: RateCity.com.au Note: Some loan-to-value ratio requirements apply.   

Lowest fixed rates for owner-occupiers

Source: RateCity.com.au Note: Some loan-to-value ratio requirements apply.

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