By Dave Fleming : 22 October, 2017

Are You Being Ripped Off?

Does Your Interest Rate Have a ‘4’ in Front of it?

www-masytermortgagebrokersydney-com-au-scissors-cutting-percentage-rate-signWith the latest home loan interest rate cuts experts are now saying if your owner occupied home loan interest rate doesn’t have a ‘3’ in front of it you are being ripped off.

However, this is not necessarily the case with investment property loans as most of those rates still have a ‘4’ in front of them. Having said that though, borrowers should even start checking out what deals are available for those loans too.

Both fixed and variable interest rates have plummeted to under the four per cent mark with the recent cash rate cut that’s now at the all time record low of 1.5%.

How Good are Today’s Rates?

At the time of writing the lowest variable rate available in the market is just 3.39% and fixed rate deals are also at tempting levels. For example 2 years at 3.58%  3 years at 3.58% and 5 years at 3.58%

It should be noted that the rates quoted above can be dependent on the type of loan you’re applying for. Different lenders have different policies when it comes to loan to value ratios, the type of loan you want (owner occupied or investment loan) and the amount you want to borrow.

Are You Winning the Mortgage Game?

www-mastermortgagebrokersydney-com-au-chasing-interest-rate-ball-down-stairsFor those homeowners who would like to get ahead of the mortgage game these amazingly low rates offer them a great opportunity. Who knows when mortgage interest rates will start to rise again, hopefully not for a long time? All the same, while they remain at these historic lows it’s an excellent opportunity to pay extra into the mortgage and start paying it off faster.

Will there be more rate cuts, it’s highly possible? The rate of inflation is lingering about the 1.5% mark, which is well below the Reserve Bank of Australia’s benchmark levels of 2-3%

Where are Interest Rates Headed?

The Australian economy continues to dawdle along as business investment is low and consumer demand isn’t very high. The exchange rates of the Australian dollar keep creeping up towards the high seventy cents mark to the US dollar. The national unemployment rate continues to hover around the 5.6% mark, but doesn’t include all those people, and there are many, who have given up looking for work.

Some experts are predicting that there is still another rate cut on the cards. Another rate cut would take Australia’s cash rate down to the record low of 1.25%. Even a couple of months ago, no one would have predicted that.

However, will the Banks Pass on the Rate Cuts?

The big question on most everyone’s mind is, will the banks pass on these rate cuts in full. The answer is no! You see, the banks have found a new game to play with interest rate cuts. They will pass on some of the 0.25% rate cut given by the Reserve bank of Australia and they keep the rest of the cut up their sleeves.

http://mastermortgagebrokersydney.com.au/wp-content/uploads/2016/09/www.mastermortgagebrokersydney.com_.au-what-is-your-interest-rateWhat does that mean? They hold back some of the rate cut so they can use it for marketing purposes. So, this is where the borrower needs to become street savvy when it comes to finding the best interest rates for their particular loan.

How does this work? These days the banks are now holding back a significant portion of any rate cut passed by the Reserve Bank of Australia so they can use it for special promotions at a later date. They may come out with a special variable rate for owner occupied or investment loans. As can be seen in the current market place they are using these extra basis points they have up their sleeves to offer tempting fixed rate loans, most of which are notably below the 4% mark.

However is it time to fix?

Maybe not, because with any more rate cuts you are going to see even more record breaking deals flooding onto the market place in the forthcoming months. Although, for those that are fixed rate minded, you might want to consider doing a split loan. That is, part variable and part fixed rate.

For anyone who wants an owner occupied home loan to purchase or refinance that is in excess of $250,000 and has a loan to value ratio of 80% or less the interest rate you should be looking at should be notably under 4%. Anything that’s got a ‘4’ in front of it means you’re paying way too much (being ripped off in other words).

Bio:
About About Dave Fleming

Dave is enthusiastic and fascinated by the digital and social media worlds. He is passionate and enjoys entrepreneurial pursuits, wealth creation financial strategies, health, fitness as well as cooking. Dave is the webmaster at www.mastermortgagebrokersydney.com.au, which is an information website pertaining to loans. He has a deep commitment towards writing about and helping people understand the basics of how the financial world works.

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