Rate rise on the horizon, speed up by US situation

Marc Terrano 1 November 2013

Increased home loan rates may come sooner rather than later because of the US debt crisis in 2013.

In October 2013, there was an indication that the U.S. financial situation may have lead to an increase in home loan rates. This means that those who are borrowing would be paying an additional $755 million monthly if the rate for a home loan was to increase by 0.25%.

Australia is influenced by changes in the US

Researchers at finder.com.au have identified that whatever the U.S.'s move is likely to be, raising their debt ceiling will affect interest rates in Australia.

It doesn't take much upward movement in interest rates to have a profound effect on the Australian residential home loan market, which is currently valued at $1.47 trillion. A small increase of just 0.25 percent could lead to an increase in $233 million in the total value of all home loans.

With the variable interest rate being lower than normal in the last half of 2013, any rise would lead to an increase in costs to borrowers' monthly payments, amounting to $755 million.

finder.com.au’s head of PR, Michelle Hutchison, reiterated that if the U.S. increases its debt ceiling, it may well have a great impact on funding costs in the home loan market throughout Australia. This is because loan providers access about 25 percent of their cash from offshore and any additional costs that might occur are just passed on to the borrower.

Borrowers should always be prepared for changes

Borrowers tend to be the losers when interest rate increase and should always keep updated with finder.com.au’s RBA expert panel. In October 2013, finder.com.au’s variable home loan rates were averaging 5.63 percent, which is far less than the average in the previous 10 years, which is 7 percent.

Financial hardship is inevitable if astute borrowers who do not prepare themselves. The first thing that a potential borrower should do is make comparisons between different home loan providers. In October 2013, variable rates ranged from 4.49 percent to 7.05 percent. This seems like a small difference, but a 2.56 percent difference could amount to a saving of approximately $488 monthly for a $300,000 home loan.

When you are in the planning stages for purchasing a home with a home loan, you should ensure you have additional cash available to pay for any rise in interest rates. You should allow for a 2 percent rise so on a $300,000 loan that could mean an additional payment of $400 a month.

More Info: Are you experiencing financial hardship?

Fixed rates are a good choice for 2013

The year 2013 was a great time now to consider the fixed rate option due to record low rates during that period. This gives you some guarantee on your monthly outgoings for the period of the fixed rate, which can be between 1 and 5 years depending on the loan provider.

Comparison of Fixed Rate Home Loans

Rates last updated September 20th, 2017
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.64%
4.83%
$0
$0 p.a.
95%
Owner-occupiers can lock in a competitive rate with no ongoing fees. Conditions apply.
3.69%
4.86%
$0
$395 p.a.
90%
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.69%
4.45%
$0
$375 p.a.
90%
Discount off an already competitive 2 year fixed rate for loans over $150k. NSW,QLD and ACT residents only.
3.74%
4.81%
$0
$0 p.a.
95%
Get a competitive 2-year fixed rate with no application or ongoing fees.
3.99%
3.84%
$0
$0 p.a.
80%
Fix a low rate home loan for 2 years with Aussie Home Loans.
4.19%
3.78%
$0
$0 p.a.
80%
Tic:Toc's fixed rate owner occupier loan has a competitive rate, limited fees and a fast, easy online application process.
3.74%
4.85%
$0
$0 p.a.
95%
Enjoy a low interest rate and borrow up to 95% (with LMI) of your property's value.
3.98%
5.13%
$600
$8 monthly ($96 p.a.)
95%
A fixed rate home loan with additional repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
4.09%
5.51%
$399
$8 monthly ($96 p.a.)
90%
Enjoy a low rate on a 2-year fixed home loan.
4.03%
5.04%
$600
$10 monthly ($120 p.a.)
95%
Flexible repayment options to help you save.
4.09%
4.59%
$0
$350 p.a.
90%
Get a 2-year fixed rate with a high maximum LVR and no application fees.
3.99%
4.98%
$0
$395 p.a.
95%
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.99%
4.90%
$0
$395 p.a.
95%
Lock in a discounted fixed rate with a low service fee.
4.14%
5.16%
$600
$8 monthly ($96 p.a.)
95%
Peace of mind for two years with a fixed interest rate.
5.99%
6.67%
$1,500
$12 monthly ($144 p.a.)
70%
Lock in a competitive 2-year fixed rate on your SMSF property
4.19%
5.18%
$600
$8 monthly ($96 p.a.)
95%
Get the stability of a 2-year fixed rate with the flexibility of great features.
Gateway Credit Union Investment Land Fixed - 2 Years
4.59%
5.57%
$200
$0 p.a.
0%

Have we missed anything in the comparison table? Tell us

Compare up to 4 providers

Rates last updated September 20th, 2017
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.49%
4.47%
$0
$375 p.a.
90%
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.69%
4.15%
$395
$0 p.a.
80%
Refinance with UBanks low 1 year fixed rate offer. No application fee.
3.74%
4.96%
$0
$0 p.a.
95%
Investors can take advantage of a short term fixed rate with no application or ongoing fees.
3.94%
3.71%
$0
$0 p.a.
80%
Apply online for this fixed rate, low-fee loan with redraw facilities and an optional offset account.
3.99%
5.25%
$600
$8 monthly ($96 p.a.)
95%
Enjoy a low rate fixed home loan with the ability to borrow up to 95% of the property value. 350K NAB Rewards Points offer available. Terms and conditions apply.
4.14%
5.26%
$600
$8 monthly ($96 p.a.)
95%
A 1 year fixed rate home loan from Commonwealth Bank.
4.09%
5.65%
$399
$8 monthly ($96 p.a.)
90%
Get a competitive 1-year fixed rate from an international bank.
4.14%
5.28%
$600
$10 monthly ($120 p.a.)
95%
Enjoy a 1-year fixed rate with flexible features such as redraw, rate lock, a partial interest offset facility, repayment pause and more.
3.99%
4.96%
$0
$395 p.a.
95%
Secure a competitive 1-year fixed rate with low ongoing fees.
3.99%
5.02%
$0
$395 p.a.
95%
A competitive package home loan with 100% offset account.
4.39%
5.79%
$600
$8 monthly ($96 p.a.)
95%
A competitive fixed rate home loan with extra repayments available.
5.99%
6.72%
$1,500
$12 monthly ($144 p.a.)
70%
Borrow from $100000 up to $2000000.
6.44%
7.25%
$1,500
$12 monthly ($144 p.a.)
70%
Enjoy a partial offset account and interest-only options.

Have we missed anything in the comparison table? Tell us

Compare up to 4 providers

Rates last updated September 20th, 2017
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.69%
4.73%
$0
$0 p.a.
95%
A limited time fixed rate home loan with extra repayment abilities. Conditions apply.
3.94%
4.84%
$0
$395 p.a.
95%
Receive discounts on interest rates with the Choice Package. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.99%
4.77%
$0
$0 p.a.
95%
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.79%
4.75%
$0
$0 p.a.
95%
A low 3-year fixed rate with the option to split your loan for free.
3.99%
4.08%
$395
$0 p.a.
80%
A competitive refinance offer on a 3 year fixed rate.
3.74%
4.42%
$0
$375 p.a.
90%
Enjoy discounts on banking products and insurance with this package loan. NSW, QLD and ACT residents only.
4.04%
5.05%
$600
$8 monthly ($96 p.a.)
95%
Flexible fixed rate home loan which will allow you to take break from repayments if you're ahead of scheduled repayments.
3.79%
4.00%
$0
$10 monthly ($120 p.a.)
90%
Get a competitive interest rate for 3 years and a discounted variable rate when the fixed period ends.
4.32%
3.85%
$0
$0 p.a.
80%
A fixed rate loan with free redraws, few ongoing fees. Apply online with a fast approval process.
4.94%
5.00%
$0
$0 p.a.
95%
A 3 year fixed rate offer from Homeloans.
4.09%
4.98%
$0
$395 p.a.
90%
Lock your rate in for 3 years and enjoy a discount on your loan of $150,000 -$249,000.
4.14%
5.07%
$600
$8 monthly ($96 p.a.)
95%
A fixed rate home loan offer from Commonwealth Bank.
4.38%
5.21%
$295
$12 monthly ($144 p.a.)
90%
Get budgeting certainty with a competitive 3-year fixed rate.
4.29%
4.63%
$0
$350 p.a.
80%
Enjoy the certainty of a fixed rate home loan along with additional repayments up to $1,000 per month without penalty.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Principal and Interest or Interest only terms, lock in a 3 year fixed rate.
4.09%
5.08%
$600
$10 monthly ($120 p.a.)
95%
Redraw facility and interest-only repayments available.
4.19%
5.09%
$600
$8 monthly ($96 p.a.)
95%
Ability to make extra repayments during the fixed term and access the money through redraw.
4.09%
4.96%
$0
$8 monthly ($96 p.a.)
95%
Enjoy a 3-year fixed rate along with additional features.
3.94%
4.90%
$0
$395 p.a.
95%
A 3 years fixed rate that allows borrowers to borrow from $150000 up to $10000000.
3.99%
4.90%
$0
$395 p.a.
95%
A competitive three year fixed rate with discounts on fees.
3.99%
4.72%
$0
$299 p.a.
95%
A competitive and flexible package that offers discounts and a sharp 3-year fixed rate.
3.79%
4.48%
$0
$299 p.a.
95%
A low 3-year fixed rate with no ongoing fees.

Have we missed anything in the comparison table? Tell us

Compare up to 4 providers

Rates last updated September 20th, 2017
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
4.14%
4.71%
$0
$0 p.a.
95%
Owner-occupiers can enjoy peace of mind with a low 5-year fixed rate.
4.59%
5.01%
$0
$395 p.a.
95%
A competitive loan with flexible features. 350K NAB Rewards Points offer available. Terms and conditions apply.
4.09%
4.25%
$0
$0 p.a.
85%
A low-fee fixed rate home loan with a redraw facility. NSW, QLD and ACT residents only.
4.54%
4.04%
$0
$0 p.a.
80%
Get quick online approval for Tic:Toc's fixed rate owner occupier home loan. Low fees, flexible repayments.
4.49%
5.01%
$0
$395 p.a.
95%
A discounted rate and fee waivers are available with this loan.
4.69%
5.14%
$600
$8 monthly ($96 p.a.)
95%
A flexible five year fixed rate home loan.
4.64%
5.04%
$600
$10 monthly ($120 p.a.)
95%
Borrow up to 80% of your home loan value.
4.34%
5.00%
$600
$8 monthly ($96 p.a.)
95%
A fixed home loan rate from Commonwealth Bank.
4.44%
5.06%
$600
$10 monthly ($120 p.a.)
95%
Enjoy a 5-years fixed rate with great features such as rate lock, a partial interest offset facility, repayment pause and more
4.59%
5.35%
$399
$8 monthly ($96 p.a.)
90%
Borrow up to $4 million on a competitive 5-year fixed rate
4.44%
4.51%
$0
$375 p.a.
95%
Package your 5-year fixed rate home loan and save.
4.69%
5.20%
$295
$12 monthly ($144 p.a.)
90%
Enjoy the stability of a 5-year fixed rate with the flexibility of up to $10k per year in extra repayments.
4.19%
4.83%
$0
$395 p.a.
95%
You can save on a host of Westpac products by packaging your 5-year fixed rate home loan.
4.93%
5.07%
$330
$0 p.a.
95%
A competitive 5-year fixed rate with no ongoing fees.
6.84%
7.22%
$1,500
$12 monthly ($144 p.a.)
70%
SMSF investors can lock in their rate for 5 years.
4.49%
4.97%
$0
$8 monthly ($96 p.a.)
95%
A 5-year fixed rate that allows for extra repayments.
5.89%
6.39%
$0
$10 monthly ($120 p.a.)
50%
Fix your rate for 5 years and pay no application fee.
4.19%
4.90%
$0
$395 p.a.
95%
A competitive interest rate with a range of repayment choices.

Have we missed anything in the comparison table? Tell us

Compare up to 4 providers

Whatever home loan you choose, remember to compare your options so you get the best deal. If you need help with choosing a home loan, a mortgage broker can also assist.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question
feedback