Rate rise on the horizon, sped up by US situation

Marc Terrano 1 November 2013 NEWS

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 July 16th, 2018
$
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%
4.47%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150k receive a discounted rate. NSW, QLD and ACT residents only.
3.89%
3.77%
$0
$0 p.a.
80%
Pay no application or ongoing fee and borrow up to 80% LVR.
3.89%
4.87%
$595
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying and pay no application or ongoing fees.
3.99%
4.89%
$445
$6 monthly ($72 p.a.)
95%
A 2 years fixed with the competitive features. Face-to-face consultations available for NSW and ACT customers.
3.84%
4.17%
$0
$395 p.a.
80%
Lock in a competitive rate for owner occupiers for two years. Extra repayments up to $30,000 over the life of the fixed period can be made.
4.33%
4.21%
$0
$0 p.a.
90%
3.89%
4.73%
$0
$375 p.a.
90%
A 2 year fixed rate home loan packaged with your day-to-day banking needs offering discounts on all.
3.65%
4.83%
$445
$6 monthly ($72 p.a.)
90%
3.99%
3.74%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
4.19%
3.87%
$0
$0 p.a.
80%
Lock in your interest rate for 2 years and enjoy flexibility, an optional offset account and a fast online application process.
3.79%
4.44%
$0
$0 p.a.
80%
Low fees and a reasonable fixed rate. This loan is only available to current and former employees of eligible Queensland government organisations.
4.04%
5.14%
$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
4.09%
5.16%
$600
$8 monthly ($96 p.a.)
95%
Get the stability of a 2-year fixed rate with the flexibility of great features.

Compare up to 4 providers

Rates last updated July 16th, 2018
$
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
3.59%
4.14%
$395
$0 p.a.
80%
Refinance with UBanks low 1 year fixed rate offer. No application fee.
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.
3.79%
4.97%
$595
$0 p.a.
90%
Investors can take advantage of a short term fixed rate with no application or ongoing fees.
3.94%
3.76%
$0
$0 p.a.
90%
Lock in a short interest loan term with a low interest rate.
3.58%
4.71%
$0
$299 p.a.
95%
Let the experts help you get a mortgage. Speak to a broker about this sharp fixed rate loan and compare many other mortgage offers from across the market.
3.99%
4.62%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
3.49%
4.49%
$0
$395 p.a.
90%
Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.
4.19%
5.00%
$445
$6 monthly ($72 p.a.)
90%
Lock in a rate for one year and get the ability to make additional repayments for 12 months without penalty. Face-to-face consultations available for NSW and ACT customers.
3.69%
4.30%
$0
$0 p.a.
90%
A discounted 1 year fixed rate if your loan has an LVR under 80% and is more than $150k. NSW, QLD and ACT residents only.
4.11%
3.83%
$0
$0 p.a.
80%
Enjoy a fast application process and flexible repayment options with this fixed rate mortgage for investing.
4.25%
4.18%
$0
$0 p.a.
90%
3.62%
4.49%
$0
$0 p.a.
80%
Get a competitive rate and avoid ongoing fees. This loan is only available to current and former employees of eligible Queensland government organisations.
4.24%
4.60%
$0
$0 p.a.
90%
Fix your investment repayments for 1 year. You can get this loan with a 10% deposit. Available in QLD, NSW and ACT only.
4.04%
5.25%
$600
$8 monthly ($96 p.a.)
95%
A 1 year fixed rate home loan from Commonwealth Bank.
4.09%
4.79%
$0
$395 p.a.
90%
Buy your investment property and set your repayments for the first year. Available with a 10% deposit. Available in QLD, NSW and ACT only.
4.24%
5.29%
$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.
5.99%
6.72%
$1,500
$12 monthly ($144 p.a.)
70%
Borrow from $100000 up to $2000000.
4.69%
5.82%
$600
$8 monthly ($96 p.a.)
95%
A competitive fixed rate home loan with extra repayments available.
6.44%
7.25%
$1,500
$12 monthly ($144 p.a.)
70%
Enjoy a partial offset account and interest-only options.

Compare up to 4 providers

Rates last updated July 16th, 2018
$
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
3.74%
4.01%
$395
$0 p.a.
80%
A competitive refinance offer on a 3 year fixed rate.
3.84%
4.47%
$0
$395 p.a.
90%
Enjoy discounts on banking products and insurance with this package loan. NSW, QLD and ACT residents only.
3.69%
4.13%
$500
$0 p.a.
95%
Competitive 3-year rate for homeowners. Comes with a low deposit option and 100% offset account.
3.85%
4.05%
$0
$350 p.a.
95%
This high LVR fixed rate loan allows you to borrow up to 95% of the value of the property you're buying.
3.94%
4.79%
$595
$0 p.a.
95%
A low 3-year fixed rate with the option to split your loan for free.
3.69%
4.93%
$600
$0 p.a.
95%
Competitive rates for fixed for 3 years with no ongoing fees.
4.14%
4.81%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.99%
5.17%
$600
$0 p.a.
90%
Competitive rates for fixed for 3 years with redraw facility.
3.99%
4.71%
$0
$375 p.a.
90%
Pay no upfront fees or monthly fees on Suncorp Bank Personal Loans when you opt for the Home Package Plus.
3.79%
4.75%
$445
$6 monthly ($72 p.a.)
90%
3 years fixed interest terms and free access to redraw facility online. Face-to-face consultations available for NSW and ACT customers.
3.90%
4.78%
$600
$0 p.a.
95%
A competitive fixed rate mortgage with split facilities and extra repayments. You can get this loan with a 5% deposit.
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.
4.49%
4.27%
$0
$0 p.a.
90%
Fixed rate loan with a 100% offset account and a 10% deposit option.
4.39%
3.95%
$0
$0 p.a.
80%
Buy an investment property and enjoy the certainty of a 3-year fixed rate with interest-only payments.
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.
4.14%
5.09%
$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.
3.89%
4.99%
$600
$8 monthly ($96 p.a.)
95%
Fix your rate and enjoy a partial offset account along with flexible repayments.
3.99%
4.91%
$0
$395 p.a.
95%
A 3 years fixed rate that allows borrowers to borrow from $150000 up to $10000000.

Compare up to 4 providers

Rates last updated July 16th, 2018
$
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
4.09%
4.25%
$0
$0 p.a.
90%
A low-fee fixed rate home loan with a redraw facility. NSW, QLD and ACT residents only.
4.09%
4.10%
$395
$0 p.a.
80%
An online only home loan with a great 5 year fixed rate. Available for refinance and purchases.
4.19%
4.75%
$445
$6 monthly ($72 p.a.)
90%
Borrow up to 90% of your home’s value and lock in your rate for 5 years. Face-to-face consultations available for NSW and ACT customers.
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.
4.54%
4.89%
$445
$6 monthly ($72 p.a.)
95%
Enjoy the low ongoing fee and borrow up to 95%. Face-to-face consultations available for NSW and ACT customers.
4.54%
5.08%
$600
$8 monthly ($96 p.a.)
95%
A fixed home loan rate from Commonwealth Bank.
4.64%
4.15%
$0
$0 p.a.
80%
This fixed rate investment loan has a competitive interest rate, limited fees and flexible repayment options. Apply online and get quick approval.
4.54%
5.10%
$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
4.29%
4.87%
$0
$395 p.a.
95%
You can save on several Westpac products by packaging your 5-year fixed rate home loan. Unlock Velocity Points for borrowing over $250,000 and get more out of your mortgage.
6.84%
7.22%
$1,500
$12 monthly ($144 p.a.)
70%
SMSF investors can lock in their rate for 5 years.
4.49%
5.04%
$600
$8 monthly ($96 p.a.)
95%
A 5-year fixed rate that allows for extra repayments.
4.39%
4.99%
$0
$395 p.a.
95%
A competitive interest rate with a range of repayment choices.

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, 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
Go to site