HOME loan customers should be paying an interest rate with a ‘3’ in front or phone up their bank and demand a better deal.
Following this week’s cash rate cut to 1.5 per cent, owner occupier home loan rates have continued to tumble, pushing many deals well below the four per cent mark.
And St George Banking Group economist Hans Kunnen is predicting there will be two more cash rate cuts to come — in November and May — which would pull the cash rate down to one per cent and home loan rates down even lower.
One of the nation’s mortgage broking firms, Australian Finance Group’s general manager of sales and operations Mark Hewitt, said if customers don’t have a rate in the threes they’re doing themselves a “disservice.”
“Without a doubt you should have a three in front of your rate or you should be considering your options — go to your lender or broker,’’ he said.
“There’s deals that are 3.6 or 3.7 per cent on variable and fixed rate deals for owner occupiers especially if the customers have a low loan to value ratio.”
BANKING ANALYST: BANKS RIGHT NOT TO PASS ON FULL CUT
RBA cuts cash rate to new record low of 1.5%
Prime Minister Malcolm Turnbull also attacked the big banks on Wednesday after they failed to pass on the cut in full.
“They owe it to the Australian people and their customers to explain fully and comprehensively why they have not passed on the full rate cut,’’ he said.
Mr Hewitt said with more rate cuts on the horizon, sticking with variable is the better option.
Analysis by financial comparison website RateCity found on a $300,000 30-year owner occupier loan there are nearly 90 variable rate deals on the market below four per cent.
Of fixed rate loans, about one in three available are below four per cent — or the equivalent of about 90 deals.
Their database shows the lowest ongoing variable rate is 3.59 per cent from Reduce Home Loans and the lowest three-year fixed rate is 3.67 per cent from loans.com.au and Mortgage House.
The average variable rate is 4.46 per cent and if this week’s cut is passed on in full customers’ monthly repayments would drop by about $45 to $1512.
RateCity spokesman Peter Arnold said for owner occupiers with 20 per cent or more equity and on a salary they are “an ideal borrower and there are big discounts available.”
1300homeloan director John Kolenda said all mortgage customers should review their mortgage said “anybody paying over four per cent is paying too much.”
While the big four announced their rates moves on Tuesday, the majority of the market is yet to make an announcement following the rate decision.
HOW TO GET A BETTER HOME LOAN DEAL:
1. Check your interest rate.
2. Go online and search the best deals available.
3. Ring your lender and ask to speak to the retention team.
4. Demand a better deal or threaten to leave.
5. If your lender doesn’t budge shop around, talk to a mortgage broker or other financial institutions.