Rates, deals and more deals
We’ve all heard now that the banks are raising their rates so who has the best deals?
Westpac and its subsidiary St George have announced an increase to their variable home loan rates by .14 per cent per annum. This is for new and existing customers and will come into effect on the 19th of September. So, a customer with a $700,000 home loan will need to come up with an extra $60 a month, roughly.
Suncorp and Adelaide Bank, have now followed suit and they will also increase their rates. For Suncorp, this is the second-rate hike in 6 months. On March 28, they increased their home loan rates by .12 per cent and from September 14, all their variable home loan rates will go up by another .17 per cent per annum.
How long will it be before all our banks jack their rates? I don’t think very long as Westpac have worn the brunt of it all and will pretty much be used by the other major banks as a scapegoat to increase their own rates.
Why these out-of-cycle hikes?
As we explained in our monthly update a few weeks back, these increases in home loan rates are a result of funding cost increases. This is because the banks in Australia borrow not just from each other, or from the Reserve Bank, but also from overseas funders. This money then gets used to lend to customers. If our banks incur increases in what they pay for the money overseas, this increase gets passed onto the customer.
Even though the actual cash rate is being placed on hold at 1.5 percent, we’ve also seen AMP, Macquarie, ING and many other smaller-tier lenders increase home loan rates slightly as a result of these increases in funding costs.
Should we all be fixing?
Fixing some of your home loan with some of these rates below to protect you against some of these out of cycle increases is not a bad option to consider. At least a portion of the loan maybe – food for thought.
Owner occupied 3 year fixed home loan rates when making principal and interest repayments*:
Owner occupied 3 year fixed home loan rates when making interest-only repayments:
What other HOT deals are the bank’s offering?
While the banks are incurring these funding pressures, their interest rates are still very low if we look at long-term term averages. Importantly for us, they are very hungry for new to bank business and they are offering the following:
- Cashback rebates of up to $2000 for refinances or purchases, this is money for jam if we simply submit an application for you with the eligible bank (conditions apply, of course)
- Up to 500,000 velocity points
- 10 years interest only
- The ability to borrow up to 98% of the property value
- Annual fee waivers
Ask us something
We are keen to hear what you think and also keen to receive your questions. If you want to know more about each banks requirements, or of some great terms, or rates on offer at the moment, please send a note to peter@blackandwhitefinance.com.au or simply click start today below. Once again, thank you for reading.
* Your full financial situation would need to be reviewed prior to any acceptance of any offer or product. Subject to lenders terms and conditions, fees and charges and eligibility criteria.