Australia’s cash rate soared in 2022, rising from a record high of 0.10% to 2.35% in just five months. Home loan interest rates have risen as mortgage lenders pass on these cash rate increases, although there are still low-rate home loans available to borrowers.
Which lenders offer the lowest interest rates?
After a 25-point rate hike and four consecutive 50-point hikes, mortgage interest rates below 4% are now among the lowest a borrower can reasonably expect to find.
Some of the lowest home loan rates found on RateCity at the time of writing include offers from:
Who can apply for a low-interest mortgage?
While first-time home buyers may be able to apply for some low-rate home loans, these mortgage deals often require a low loan-to-value (LVR) ratio, which means it can be harder to qualify. without a substantial deposit. Some low-rate home loans are specifically aimed at borrowers refinancing an existing mortgage, with lenders hoping customers are ready to jump ship in search of a better deal.
Keep in mind that more and more lenders will pass RBA cash rate hikes on to customers over time, making low-rate home loans harder to come by. Plus, it’s important to consider more than just the interest rate when taking out a home loan, whether you’re applying for your first mortgage or a refinance. The fees, features and other benefits of a mortgage can make a big difference in the total value it provides.
How much extra hardship can borrowers expect?
RBA cash rate hikes are putting pressure on the budgets of many Australian households, thanks to rising variable mortgage rates pushing up the cost of interest payments. But according to the RBA governor, the “scourge” of high inflation could make life even more difficult, necessitating higher rates.
It is possible that in future meetings the RBA Board will choose to slow the pace of the cash rate hike, before pausing to assess their impact on inflation and the Australian economy. Economists at the big four banks predict the RBA could halt its rate hikes by the end of 2022, or early 2023.