Borrowers can save thousands by switching to best rates on market

3 weeks ago 12

Hopes are fading for another RBA rate cut, but borrowers can save up to $700 a month with a simple trick.

Higher than expected July inflation numbers have widely been seen as the end of hopes for another cash rate cut at the RBA’s next board meeting in September.

Experts are urging borrowers to be proactive if they want to score some extra savings leading into the warmer months.

And motivated borrowers will be rewarded, as lender competition continues to intensify, believes Sally Tindall, Canstar data insights director.

“The bottom line for borrowers is, if you’re hoping for another rate cut next month, you might have to take action yourself,” Tindall said.

“Despite inflation nudging up, lenders are still competing for new home loan customers, with the new lowest variable rate in our database dropping to an ultra-competitive 4.89 per cent.

“It’s not the only lender putting competitive rates on the table. The Canstar database shows almost 30 lenders currently offer at least one variable rate under 5.25 per cent for owner-occupiers paying principal and interest.”

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Rates on some standard variable home loans are now below 5 per cent for owner-occupiers. But don’t expect one of those deals from any of the big four banks. The best rates come from lenders that many Australians won’t have heard of.

SCROLL DOWN FOR 10 BEST VARIABLE RATES ON MARKET

Canstar’s Sally Tindall said borrowers should take action to access big savings. Picture: Tim Hunter.

Canstar and Finder both track the best variable rates out of up to 110 lenders. Both have Easy Street as the lender with the best deal, an impressive 4.89 per cent. Finder’s top 10 variable rates on the market sees Horizon Bank and Police Credit Union (both 4.99 per cent) next best after Easy Street, followed by Police Bank and Border Bank (both 5.09 per cent), and on 5.14 per cent, Pacific Mortgage Group and RACQ Bank.

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The Mac (5.17 per cent), Qudos Bank (5.19 per cent) and Bank First (5.24 per cent) round out the top 10.

Stack those deals up against the average variable rate being paid by existing owner-occupiers, which Canstar estimates to be 5.54 per cent, there are significant savings to be made.

For example, someone with a $1 million mortgage could save $145,000 over a 30 year home loan by switching to a 4.89 per cent deal at Easy Street.

The simple switch would mean an extra $400 a month in their pockets.

And that’s just switching from an average rate. There are plenty of people out there still paying 6 per cent or more.

A borrower on a 6 per cent deal now, would save about $700 a month by switching to that best deal, and a staggering $250,000 over the life of the loan.