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Cash Rate reducing but lenders are quietly increasing home loan rates

Despite the official cash rate reducing to just 1.75%, some home loan lenders are quietly increasing the interest rates on some of their lending products.

While all has been quiet on the Reserve Bank front (until May), some of the other banks in Australia have been busy behind the scenes, strategically increasing the interest rates on some of their home loan products. Borrowers that don’t bother to read their statements or the other paperwork their bank sends them could get a surprise.

While Bank of Queensland caused a stir at its recent half-year financial report by flagging its intention to increase variable mortgage rates by 12 basis points for owner-occupiers and by 25 bps for investors (an increase that has since taken effect), a number of other lenders have also quietly increased mortgage interest rates on selected products in recent times.

The institutions that CANSTAR has noted as increased some home loan rates since the start of March include:

  • AMO Group
  • Aussie
  • Auswide bank
  • Bank of Sydney
  • Beyond Bank
  • Blue Sky Building Society
  • Citi
  • Click Loans
  • Freedom Lend
  • Homeloans.com.au
  • Illawarra Credit Union
  • Macquarie bank
  • Mortgage House
  • MyState Bank
  • NAB
  • P&N Bank
  • Pacific Mortgage Group
  • Qantas Credit Union (now called Qudos Bank)
  • Qld Police Credit Union
  • State Custodians

What home loan rate are you paying?

What difference does a home loan interest rate make?

Currently on the canstar.com.au database, the difference between the highest and lowest standard variable interest rate is a whopping 2.52 percent. That margin is more than our current official cash rate! What rate are you paying?

Based on a $300,000 home loan over 30 years, these are the monthly repayments you could expect at various interest rates:

Loan Interest Rate Monthly repayment
$300,000 3.85% $1,406
$300,000 4.35% $1,493
$300,000 4.79% (average) $1,572
$300,000 5.35% $1,675
$300,000 6.11% $1,820

Source: canstar.com.au. Based on $300,000 loan over 30 years

And for those with a bigger debt, based on a $1,000,000 home loan over 30 years, these are the monthly repayments you could expect at various interest rates:

Loan Interest Rate Monthly repayment
$300,000 3.85% $4,688
$300,000 4.35% $4,978
$300,000 4.79% (average) $5,241
$300,000 5.35% $5,584
$300,000 6.11% $6,066

Source: canstar.com.au. Based on $1,000,000 loan over 30 years

So reducing your home loan interest rate from the current average to, say, 4.35 percent, could potentially save you $263 per month.

Has your home loan interest rate changed?

Why don’t you jump online and check your latest home loan statements? With our mortgages being such a significant debt, even small changes in rate make a big difference in monthly repayments. So check what home loan interest rate you’re paying, then compare home loan options here.

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