Who is still offering low-rate home loans after the August 2022 rate hike?

For the fourth month in a row, the Reserve Bank of Australia (RBA) raised the national cash rate at its August meeting. Many mortgage lenders have already passed this rate hike on to their customers, so where can you still find a low home loan interest rate?

How high have interest rates risen? 

Between May 2022 and August 2022, the Reserve Bank of Australia (RBA) has increased the national cash rate target by 175 basis points, taking it from the record low of 0.10 per cent to 1.85 per cent.

With many mortgage lenders passing these increases on in full, RateCity research shows that homeowners with a $500,000 home loan balance and 25 years remaining on their mortgage could find themselves paying $472 more in August in home loan repayments than they were in April 2022.

Who is offering some of the lowest interest rates? 

After four months of rising cash rates, home loans with interest rate of less than 3 per cent are few and far between. According to the RateCity database at the time of writing, interest rates of less than 3 per cent were only available from:

• P&N Bank
• Pacific Mortgage Group
• Qudos Bank (due to increase as of 18 August 2022)
• Hume Bank
• Gateway Bank

Of course, these rates may change as more lenders pass on the RBA rate hikes. It’s important to compare home loans before making a decision, and to consider more than just the interest rate alone to make sure the home loan is suited to your financial situation.

For example, several of these low-rate home loans require a low Loan to Value Ratio (LVR) – in other words, you may need a deposit or equity of 30 or 40 per cent to apply, which may make them better suited to some refinancers than to some first home buyers. You also may also miss out on some home loan features, such as an offset account.

When will interest rates stop rising?

Three of Australia’s four big banks are predicting that the national cash rate could halt its rise in November 2022, though Westpac is predicting that it will hit its peak in February 2023.

Some banks are also forecasting that the RBA could cut the cash rate later in 2023, though this will depend on a range of factors, such as the effect of these rate hikes on inflation.  

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