TO FIX OR NOT TO FIX ?
Whether you ’ re refinancing or looking to buy it ’ s more important than ever to find a loan structure that best suits your personal circumstances and at the most competitive interest rate available to you . The rising rate environment , combined with sensational media headlines , can seem overwhelming , but with the right advice it doesn ’ t have to be .
Australia sitting at :
• New South Wales - $ 737,000
• Victoria / Tasmania - $ 595,000
• Queensland - $ 547,000
• Western Australia - $ 468,000
• SA / NT - $ 438,000
According to Loan Market data , the number of loans being lodged across Australia has remained stable over the last few months . But what we ’ ve seen is a swing towards variable loans along with a higher proportion of refinancing . More than half of all the loans lodged have been driven by people refinancing their current home loans and 85 per cent of those loans have been variable .
This month the Reserve Bank of Australia ( RBA ) initiated another 0.5 per cent rate rise , taking the cash rate to 1.85 per cent . The major lenders have passed this increase on in full , taking effect 12 August . The majority of the fixed-term home loan rates offered by the major banks start with a ‘ 5 ’, but we ’ re seeing some very competitive variable rates on the market sitting closer to 3 per cent .
Loan Market is home to one of the largest lending panels in Australia , working with 64 banks and lenders . Over the page we ’ ve outlined the top five most competitive variable rates on offer as at 5 August , looking at both major and non-major lenders . We ’ ve compared two owneroccupier loan values , $ 615,000 and $ 1 million , with a 20 per cent deposit and 30-year term . It ’ s important to remember that by working with your broker , not only can they further negotiate rates on your behalf , but they can access lenders you would otherwise not be able to .
The average loan-to-value ratio ( LVR ) has also remained steady . Loan Market data reveals that 2021 / 22 , the average LVR sat at bove 71 per cent , while the last two months reflected an average LVR of just over 69 per cent . Generally speaking , when property prices fall , so do loan amounts and so the LVR is likely to remain fairly consistent on new purchases . Where this trend may differ is on refinancing , the LVR could rise if the value of the property has fallen .
According to the RBA ’ s Deputy Governor , Michele Bullock , the rising house prices over the last few years have benefited homeowners , who have accumulated sizeable equity in their homes . This upward price trend , combined with tighter lending criteria , has meant the proportion of loan balances in negative equity has declined significantly . * ABS , RBA and Corelogic data show the share of pre-pandemic loans with negative equity sat at 2.25 per cent but as of May 2022 this figure sits at a nominal 0.1 per cent .
For those in an existing loan , now ’ s the time to talk to your broker to ensure you ’ re on the most competitive interest rate available to you . For those looking to purchase , make sure you ’ re buyer ready with your pre-approval up to date and in line with interest rate changes .
Across the Loan Market network we saw a slight decline in the average loan size over the May to June period , but in July we saw an uplift with the average loan size around
Andrea McNaughton Managing Director Loan Market
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