Bargain home loans still available to homebuyers despite no rate cut in October 2013.
While the Reserve Bank of Australia didn’t cut the cash rate for October 2013, finder.com.au is still warning borrowers to actively compare deals to make sure they’re getting the best deal.
Many of Australia's top economists from the big banking giants are featured on finder.com.au, predicting when any further rate cuts are likely, but it won't be for a while yet.
I think the next rate rise is a bit of a way off, I don't think the RBA will go again, but I think that there's that possibility that they could
Janu Chan, St. George
‘If the Fed really delays its tapering and we have Aussie dollar still very high and high from here well into next year, then it's well possible that the RBA could go again, but I think that given that there are the signs of improvement in what the RBA is looking for, like housing and non-mining investment then they'll probably prefer to hold off.
Interest rates at October were still at 2.50 percent and the big four banks, Commonwealth Bank, ANZ, Westpac and NAB, cover 85 percent of the total value of home loans that are available for homes that are owner occupied.
But there are other non-bank lenders who are after a share, too.
During October 2013, NAB and Westpac were offering the lowest advertised variable rates at 5.08 percent for a $300,000 home loan out of the big four. But you could still find a lower rate than that, offered by loans.com.au, at 4.57 percent.
Many potential borrowers are not aware of the non-bank loans and only shop around amongst the big banks, not realising that there are more competitive rates available outside this area.
Shopping and comparing online is a great way to get the best deals, as more and more small lenders are undercutting banks on rates and obtaining their customers from Internet searches or through online comparisons.
The savings are quite substantial when it comes to an average $300,000 home loan from a bank at 5.08 percent. Potential borrowers have to understand that loyalty to their bank will not guarantee a good home loan rate. The only way to find out is to visit a comparison site, which advertises deals from different lenders that can be used for a proper comparison.
Calculating what payments you can afford
It's very important to ensure that you have the money in cash available each month to pay back your loan and as with a variable rate loan, this could change without notice and could be disastrous for you if you have failed to factor in changes in interest rates.
If you are able to afford monthly repayments of $2,000, using October’s average variable rate of 5.63 percent, you could afford a loan of $347,000. If rates do rise to 7 percent, this loan may cost you $309 more each month.
Related: Start with our home loan calculators