Canstar reports mixed movements in home loan rates

Finance expert notes a missed chance for many borrowers

Canstar reports mixed movements in home loan rates


By Mina Martin

The Australian mortgage landscape has seen a mix of rate increases and cuts by various lenders over the past week, affecting both owner-occupier and investor variable and fixed rates, Canstar has reported.

While four lenders have raised 12 owner-occupier and investor variable rates by an average of 0.09%, two lenders have reduced three such rates by an average of 0.53%. Australian Unity has upped one owner-occupier and investor fixed rate by an average of 0.35%, whereas five lenders have decreased 67 fixed rates by an average of 0.18%.

See table below for a summary of last week’s rate changes.

Currently, the average variable interest rate for owner-occupiers making principal and interest payments stands at 6.91% for an 80% LVR, with the lowest variable rate available being 5.69% from Australian Mutual Bank as an introductory rate.

According to Canstar, there are 19 rates below 5.75% on their database, a number that has remained unchanged from the previous week.

See table below for the top-five lowest variable home loan rates on the Canstar database.

Steve Mickenbecker (pictured above), Canstar’s finance expert, noted that despite the cash rate holding steady, borrowers have faced 13 cash rate hikes since May 2022, causing significant increases in many variable rates by a total of 4.25%.

Yet, with 19 variable interest rates still below 5.75%, borrowers could save substantially – around $455 monthly or nearly $4,500 annually on a $600,000 loan over 30 years compared to the average variable rate of 6.91%.

“With the huge savings available it’s surprising to see the latest ABS lending statistics show a slowdown in external refinancing of 1.6% for December and it is now running at just over 12% from a year ago. An opportunity is being missed by many borrowers,” Mickenbecker said.

Canstar’s Consumer Pulse Report from December revealed more than a third of homeowners and investors are unprepared for mortgage interest rates to stay at current levels before potential rate cuts.

While the next cash rate movement is widely expected to be a decrease, it may still be several months away.

“It would be a shame for borrowers to pass up the chance to cut their monthly repayment now and instead sweat on the Reserve Bank to come up to the party,” Mickenbecker said.

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