The cost of living continues to climb. Although household budgets are tight, you can still score competitive rates if you’re purchasing a home or buying an electric vehicle. And if you’d prefer to stash your cash, there’s great savings rates too.
At the beginning of December the Reserve Bank of Australia (RBA) hiked the cash rate for the eighth consecutive month, lifting it by 25 basis points to 3.10 per cent.
All but one of Australia’s Big Four banks have passed on the full rate increase to existing borrowers. The outlier, Westpac, will raise its rates, effective 19 December. New customers can avoid this loyalty tax by taking out low fixed-rate home loans, while refinancing options may be advantageous for current mortgage holders seeking a better deal.
It pays to compare the market before you commit. Let’s explore some of the most competitive interest rates for homebuyers, eco-friendly car shoppers and extended-term savers.
Lowest variable home loan interest rates
The RBA has been on a tear this year, raising rates a total 300 basis points. RateCity research reveals that the average owner-occupier with a $500,000 loan and 25 years remaining on their mortgage have seen repayments rise by $834 since April.
This is a huge expense for already cash-strapped homeowners. Prospective homebuyers may want to re-evaluate their budgets as interest rates, and therefore repayments, are tipped to continue to increase in the new year.
New borrowers seeking a fixed-rate home loan may be able to avoid some mortgage stress over the short term, as a number of lenders offer competitive, reduced rates for these types of loans.
Remember that once the fixed-rate period expires, your mortgage will likely revert to a variable interest rate. This is often the lender’s standard variable rate, which is generally higher than the discounted variable rate that many lenders offer to attract new customers.
Given the current real estate climate, property investors may be looking for a little more stability when it comes to their mortgage repayments. It is possible to lock in a fixed rate for up to five years and pay only the interest charges to help keep your cash flow more manageable. Of course, because you won’t be lowering your loan principal during this time, you may end up paying more in interest charges on the property over the long term.
Lowest home loans for owner-occupiers on RateCity’s database
| Category | Lender | Rate | Comparison rate |
| Variable | Bank First | 4.44% | 4.47% |
| 1 year fixed | Bank Australia | 4.64% | 4.83% |
| 2 year fixed | RACQ Bank | 5.19% | 5.38% |
| 3 year fixed | Police Bank | 5.19% | 5.12% |
| 4 year fixed | ING | 5.49% | 5.31% |
| 5 year fixed | RACQ Bank | 5.39% | 5.43% |
Source: RateCity.com.au Rates are for owner-occupiers paying principal and interest. Rates are from lenders who have announced December rate hikes. LVR requirements may apply. Data accurate as of 16/12/2022.
Lowest variable home loans for investors on RateCity’s database
| Category | Lender | Rate | Comparison rate |
| Variable | Bendigo Bank | 4.72% | 4.87% |
| 1 year fixed | Police Credit Union | 4.79% | 5.70% |
| 2 year fixed | Bank Australia | 5.34% | 5.06% |
| 3 year fixed | Police Bank | 5.34% | 5.38% |
| 4 year fixed | Macquarie Bank | 5.69% | 5.29% |
| 5 year fixed | HSBC | 5.49% | 5.40% |
Source: RateCity.com.au Rates are for investors paying principal and interest. Rates are from lenders who have announced December rate hikes. LVR requirements may apply. Data accurate as of 16/12/2022
Competitive green car loans
Australians are starting to come around to sustainable vehicles, with sales of battery electric, plug-in hybrid and hybrid vehicles on the rise, according to the latest figures from the Federal Chamber of Automotive Industries (FCAI). A total 13,415 zero and low-emission vehicles were sold, including 4,457 battery electric, 8,529 hybrid and 429 plug-in hybrid vehicles.
The Tesla Model Y recorded 1,805 sales in November, ranking as the tenth highest-selling vehicle in Australia. Given that deliveries for this particular vehicle only began in August, it’s clear that there is a growing demand for green cars.
For those contemplating the switch to electric vehicles (EVs), affordability remains the greatest barrier. While a low-priced new petrol vehicle could cost you anywhere from $15,000 to $20,000, the most affordable EVs in Australia start at $45,000.
Selecting a competitive green car loan can help to make repayments and other ongoing costs, such as fuel, more affordable. Lenders often provide eligible customers lower interest rates, on average, to encourage them to make sustainable vehicle purchases.
Lowest green car loan rates on RateCity’s database
| Lender | Rate | Comparison rate |
| Illawarra Credit Union | 3.99% | 5.15% |
| Queensland Country Bank | 4.49% | 4.77% |
| People’s Choice | 4.89% | 5.24% |
| Horizon Bank | 4.99% | 5.20% |
| Community First Credit Union | 4.99% | 5.75% |
High rate term deposits
While rising interest rates are causing financial stress for millions of mortgage holders, savers are cheering as some of the highest rates on offer have climbed to 4.6% as of December.
Unlike other investment options (shares, EFTs, bonds), term deposits are supported by the Financial Claims Scheme, also known as the government guarantee. Deposit-holders with authorised deposit-taking institutions (ADIs) are secured to the value of $250,000, in the event their provider were to go under. This guarantee can help reduce your investment risk.
No matter what way you choose to invest your funds, be sure to compare all your options before committing.
Highest term deposit rates on RateCity’s database
| Term | Bank | Rate |
| 5 years | Rabobank | 4.60% |
| 2 years | AMP Bank | 4.55% |
| 3 years | G&C Mutual | 4.50% |
| 3 years | The Mutual | 4.50% |
| 4 years | Judo Bank | 4.50% |
Leave a Reply
You must be logged in to post a comment.