Borrowers urged to check interest rates

Posted on 24/02/2010  

Australians should compare interest rates on home loans and be ready for increases.  Financial comparison website RateCity says interest rates for home loans have been increasing despite the cash rate remaining unchanged since December 2009.

 

RateCity records an average increase of 0.32 percentage points (32 basis points) for standard variable home loan rates across more than 100 lenders since the Reserve Bank lifted the cash rate by 0.25 percentage points (25 basis points) in December.

 

The major four banks (ANZ, Commonwealth, NAB and Westpac), which hold the majority of home loans, have increased their standard variable home loan rates by 35 basis points on average since December.

 

The biggest increase was Westpac, which raised its standard variable rate 45 basis points and now holds the highest rate out of the four (6.76%), followed by ANZ (6.66%), Commonwealth (6.6%) and NAB (6.49%).

 

Damian Smith, RateCity’s CEO, says lenders are already ahead of the Reserve Bank cash rate movements.

“Lenders have on average increased their standard variable rates by two basis points more than the Reserve Bank since it began to increase the cash rate in September 2009,” he says. “That’s a total increase of 77 basis points for the average standard variable home loan rate over the past five months.

 

“The major four banks lifted their standard variable rates on average by 85 basis points, 10 basis points higher than the cash rate since September.”

 

Smith says comparison variable home loan rates are as low as 5.7% for a typical $300,000 loan, which could save over $1,300 per year compared to the average standard variable rate of 6.31% for this loan size, or potentially over $33,000 over the life of a 25-year loan (excluding break costs and other fees).

 

Smith urges borrowers to check the fine print on contracts before signing up to any financial product.

 

 

ENDS

 

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