More rate cuts likely in 2013: A guide to the lowest rate home loan offerings as of January 7
The Reserve Bank is expected to cut the cash rate a number of times in 2013 to support the non-mining sectors of the economy as the mining investment boom reaches its peak.
Currently variable rates are starting from as low as 5.17% – the rate being offered by non-bank lenders Mortgage View and Nationwide Mortgage.
Newcastle Permanent is offering a one-year fixed rate of 4.99% and Resi is offering a three-year fixed rate of 5.09%.
Fairfax finance columnist David Bassanese points out that financial futures markets have a “near certain expectation” of a rate cut when the RBA monetary policy committee meets for the first time in 2013 on February 5.
According to Bassanese, the best the Australian economy can hope from the mining sector is a zero contribution to economic growth in 2013.
“Barring a sudden slump in the dollar, interest rates will need to do most of the work in helping to rebalance the economy,” he writes in the Australian Financial Review.
AMP Capital chief economist Shane Oliver is tipping at least two rate cuts in 2013, taking the cash rate to 2.5%, “in order to push bank lending rates down closer to past cyclical lows”.
But he says the cash rate could fall as low as 2% if non-mining sectors like retailing and housing don’t recover fast enough.
“This could occur, for example, if rising unemployment triggers a desire on the part of households to more rapidly reduce their debt levels. This could see the RBA cut the cash rate to 2% or below,” writes Oliver in his outlook for 2013.
Fixed rates are likely to continue to fall as lenders seek to lock in borrowers and circumvent the government’s ban on mortgage exit fees.
These are the lowest advertised mortgage rates based on listings by ratecity.com.au, Mozo.com.au and infochoice.com.au as of January 7:
Lowest variable rate offerings:
Provider | Loan name | Rate | Comparison rate* |
Nationwide Mortgage | True Saver Home Loan | 5.17% | 5.18% |
Mortgage View | Pro Pack New Year special | 5.17% | 5.19% |
Pacific Mortgage Group | PMG Standard Variable | 5.32% | 5.32% |
Lowest one-year fixed-rate offerings
Provider | Loan name | Rate | Comparison rate* |
Newcastle Permanent | Fixed Rate Home Loan | 4.99% | 5.98% |
UBank | UHome Loan for refinancing | 5.03% | 5.36% |
My Mortgage Freedom.com.au | Fixed Rate (LVR 75%-90%) | 5.09% | 5.88% |
Lowest three-year fixed-rate offerings
Provider | Loan name | Rate | Comparison rate* |
Resi | Flexi Fix Plus 75 | 5.09% | 5.80% |
UBank | UHome Loan for refinancing | 5.13% | 5.26% |
Pacific Mortgage Group | PMG Fixed | 5.19% | 5.42% |
*A comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure.
For information on refinancing, watch our free webinar Refinancing and the Interest Rates Riddle