Home loan interest rates decisions in Australia are taken by the board of Reserve Bank of Australia. With a significant decline in key commodity prices and the risks of the Chinese market deflating, the official RBA cash rate has remained at a steady low of 2% with market speculations that it could decrease further during 2016. Even with the cash rate on a remaining steady, the low value of the dollar has resulted in the major banks significantly reducing the loan amount they are willing to lend to home owners. For example, a couple who earn $60,000 each looking for a home loan for an owner occupied property will now receive up to $65,000 less than they would have received a year ago from major banks. The same couple looking for a home loan to buy an investment property will receives $80,000 less than they would have a year ago.
With major lenders tightening their lending criteria, as a borrower it is important to consider the lender and loan type that best suits your needs. This will help to mitigate any risks to your financial situation should home loan interest rates increase.
Home loan interest rates vary depending not only on the product and the lender but also the purpose of the home loan. For example, home loan interest rates for a principal place of residence are usually about half a percent lower than home loan interest rates for investment properties another determinant of home loan interest rates is whether your home loan is a fixed or variable. Whilst fixed rate home loans provide security, they are often at the cost of a slightly higher interest rate than variable rate home loans.
If you are looking for a home loan, getting the best home loan interest rate in the market can save you thousands of dollars. Many mortgage and home loans brokers are there to help you to compare interest rates from over 40 lenders and 4,000 products. This coupled with the help of a mortgage broker helps you to make a more informed choice. With home loan interest rates expected to move in, many borrowers are leaning towards the security of a fixed rate home loan. However, the big question remains, should you fix your home loan interest rate now or not?
Identifying which loan features are major in a home loan and knowing which is best to get a fixed rate or a variable rate home loan can be a little bit of confusing. Therefore hiring a professional mortgage broker can help you to get suggested with the most competitive interest rates in the market but he/she can also make sure you with the right features in your home loan according to your requirement.