Ratehacker: Where To Get The Best Deals On Home and Car Loans Right Now

The Reserve Bank of Australia (RBA) has left the cash rate on hold yet again at an historic low of 0.10 per cent this week, meanwhile, a growing number of lenders are beginning to hike 4-year fixed home loan rates.

And investors have started to lead the charge for new home loan lending. The value of new loans for investors on the rise, as owner-occupiers start to pull away from an increasingly unaffordable housing market.

Meanwhile, the used car market has really been heating up thanks to constrained new vehicle supply, with Aussies left to wonder if it’s more affordable to get a used vehicle, or just wait for a new model.

Let’s take a detailed look at how interest rates have changed or are set to move for May 2021.

To fix or not to fix

As RBA Governor Philip Lowe continues to state that interest rates aren’t expected to increase until 2024 at the earliest, several lenders have been increasing their 4-year fixed home loan rates.

RateCity research shows that there are only six 4-year fixed rates under 2 per cent on its database, compared to 32 at the start of the year. No 5-year fixed rates currently sit under 2 per cent.

But it appears that the shorter-term fixed rate options are still maintaining a competitive edge, with the number of 2-year fixed rates under 2 per cent doubling to 71 since the start of the year. The number of 3-year fixed rates also almost doubled to 49 in the same time frame.

If you’re a first-time buyer or refinancer considering a fixed home loan rate, it may be worth taking this into consideration. Factor in a potential rate rise of at least 2 – 3 per cent into your budget before you lock in any fixed home loan rate.

Lowest fixed home loan rates on RateCity database

Source: RateCity.com.au. Lowest owner-occupier home loan rates, data accurate as of 05.05.2021.

Investors stepping ahead of owner-occupiers

As the housing market continues to heat up across the country – particularly in Sydney and Melbourne – we may begin to see owner-occupier demand back off.

The latest CoreLogic national home value index figures for April show that housing values lifted by 1.8 per cent last month. Housing values are up 6.8 per cent nationally in the last three months, and 10.2 per cent higher than the Covid-trough seen in September 2020.

As prices continue to climb, first home buyers may begin to feel priced out of the market, leading investors to surge back into the market. And the latest Australian Bureau of Statistics (ABS) lending indicators for March may be showing just that.

ABS lending figures released yesterday show that the value of new investor loans grew by 12.7 per cent, or $878 million, month-on-month in March (according to seasonally adjusted data). Comparatively, first home buyer owner-occupier lending fell by 3.1 per cent month-on-month.

For the growing number of investors, there are competitive interest rates available if they’re willing to shop around, with number of home loans offering investors rates below 2 per cent.

Lowest investor home loan rates on RateCity database

Source: RateCity.com.au. Lowest investor home loan rates, data accurate as of 05.05.2021.

Bonus points for credit cards

The RBA cash rate has always done very little to budge credit card interest rates, and May has been no exception. Aussie card users have come to expect the average credit card rate to sit between 16 – 17 per cent.

But new customer value may still be found through credit card bonus points on sign up. There is a lot to consider when shopping around for a new card, including interest rates and fees, but sign-up rewards points can be an enticing perk for some customers.

Keep in mind that cardholders will need to meet strict eligibility criteria to qualify for these credit cards, with bonus points potentially carrying conditions around minimum spend to be eligible.

Highest credit card sign-up bonuses on RateCity database

Source: RateCity.com.au. Data accurate as of 05.05.2021.

Some of the most competitive credit card sign-up bonuses on RateCity database

Restricted Aussies turning to used vehicles

Used vehicles have had a bit of a resurgence in recent months, thanks in part to travel restrictions and constrained new vehicle supply globally.

The latest Datium Insights-Moody’s Analytics Price Index for March showed that wholesale used-vehicle prices grew 5 per cent in the first quarter of the year, with current prices now 37 per cent higher than a pre-pandemic high set in February 2020.

The recorded growth for March was the slowest quarterly increase over the past four quarters. However, it is still faster quarterly growth than previous figures recorded by Insights-Moody’s Analytics in the last decade.

If you’re considering purchasing a used vehicle, it’s important to keep in mind that interest rates tend to be more competitive for newer vehicle finance. Generally speaking, this may be because used cars have greater wear and tear than new cars and are less likely to last the length of a car loan.

That being said, here are some of the most competitive used car loans to let you hop into the drivers’ seat today.

Lowest used car loans on RateCity database

Source: RateCity.com.au. Data accurate as of 05.05.2021.

Some of the lowest used car loans on RateCity database

Source: RateCity.com.au. Note: Based on a $30,000 5-year used car loan. Data accurate as of 05.05.2021.