June is upon us, and another Reserve Bank Board meeting has come and gone, with the official cash rate being held at 0.10 per cent once again.
Meanwhile, Australia saw the end of ultra-low longer-term fixed-rate home loans, after the last four-year fixed rate under 2 per cent was hiked to 2.29 per cent at the start of the month. But despite the challenge many hopeful homebuyers are facing due to the steady momentum in the housing market, there is still plenty of opportunity to secure a low-rate home loan.
And with the cash rate forecast to remain as is for at least another year or two, borrowers are benefiting from competitive rates on other personal finance products, such as personal loans.
Nabbing a low-rate home loan
Even though most lenders are hiking four-and-five-year fixed-rate home loans, there is still plenty of competition in both the variable rate and short-term fixed-rate market. In fact, some lenders are still trimming their rates in these categories – particularly variable rates.
Currently, there are 189 home loan rates under 2 per cent on RateCity’s database – the highest on RateCity record – meaning mortgage holders are still spoilt for choice.
Some of the shorter-term fixed-rate home loans under 2 per cent that are currently available include:
- bcu 1 Year Fixed Rate Home Loan at 1.67%
- Greater Bank Great Rate 1 Year Fixed Home Loan (ACT, NSW and QLD only) at 1.69%
- Hume Bank myBlue 1 Year Fixed Home Loan at 1.79%
- Tic:Toc Live-in 1 Year Fixed Home Loan at 1.89%
But if you are considering taking advantage of the more competitive variable rate home loans on offer, be sure to allow room in your budget for potential rate rises in the years to come.
Here are some of the top-rated variable rate home loans on the RateCity database:
- Tic:toc Live-in Variable (With Offset) Home Loan at 2.04%
- Mortgage House Lifestyle First Refinancer Special Home Loan at 1.94%
- Pacific Mortgage Group Standard Variable Home Loan at 2.09%
- Freedom Lend Freedom Variable Home Loan at 2.17%
- Reduce Home Loans Super Saver Home Loan at 1.99%
If you’re a first home buyer, doing your due diligence before applying for a home loan could mean you land not only the most competitive rate available to you but the most suitable product for your needs.
UBank’s bi-annual Know Your Numbers survey found that a significant percentage of surveyed Australians have limited knowledge of some of the terms and jargon used in the mortgage and finance industry. This includes understanding the meaning of a loan to value ratio (LVR), which refers to the maximum size of the loan compared to the value of the property being purchased, and an offset account, which is a savings or transaction account that is linked to your home loan.
Getting ahead by consolidating debt
In the year since COVID hit, Aussies have managed to wipe $6.96 billion of debt accruing interest off their credit cards. However, according to data released by the Reserve Bank of Australia, this number is beginning to plateau.
Research from Citi also found that credit card spending for April 2021 was 35 per cent higher than April 2020 at the start of the pandemic.
Because credit card interest rates are often significantly higher than other personal lending products such as personal loans, credit card debts can be more difficult for some borrowers to get on top of.
If you have multiple credit cards and are only managing to pay the minimum amount due each month, it could take you years to pay off your debts – likely accruing a substantial amount of interest charges along the way.
One option that may be worth considering if you are finding it difficult to pay down your credit card debts is a debt consolidation personal loan. Consolidating your debts using a personal loan simply means taking out a new loan to pay off all your existing debts, and then making consistent monthly repayments towards the new loan.
RateCity’s database features plenty of personal loans with competitive interest rates, including the following:
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