Rates on hold but market still awash with home loan bargains

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The RBA has this afternoon announced that rates will remain on hold for the moment but banks are continuing to offer low interest rate deals for ideal borrowers with big deposits.

RateCity data shows that ideal owner occupier borrowers, who have at least a 20 per cent deposit, are getting the best deals with rates up to 0.55 per cent lower than other mortgage holders.

“The five lowest variable rates on our site are only for people with deposits of 30 per cent or more,” said Sally Tindall, money editor at RateCity.

“This demonstrates the current trend of lenders favouring low risk loans for owner occupiers. On the other hand investors are financing these discounts, with higher interest rate loans the only option on offer to these borrowers.”

While this is bad news for investors, for ideal borrowers with a large deposit saved up competitive rates abound and they have their pick of the bunch.

“This is all about banks minimising risk by lending to secure borrowers and they are right to reward them with lower rates,” said Tindall.

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New customers are the other big winners in the competitive rate wars with banks luring these customers by dropping their lowest variable rate exclusively for them. Whilst these introductory offers are great for new home buyers who are looking for an incentive to enter the property market now, it does suggest that loyalty is dead for old customers.

Ms Tindall suggests an upfront approach for those who find that their bank is offering a better deal to new customers.

“If this is happening to you check what your bank is offering new customers and ask for that same low rate. There’s nothing wrong with calling and negotiating a better deal with your lender.”

With the number of lenders offering rates under 4 per cent reaching over 20, borrowers have plenty of bargaining power.

“The market is very competitive at the moment so if your bank won’t budge on your rate don’t be afraid to switch if need be,” said Tindall.

With rates so low and competition so high now is a good time to compare your home loan with what’s on the market to make sure you’re getting the best deal possible. 

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