Are you working in a market where it can be hard to find buyers or get them over the line?
The latest CoreLogic statistics show that the market is doing well in Hobart (12.3 per cent annual growth), Melbourne (8.9 per cent) and Canberra (4.9 per cent), but is flat or going backwards in the other capitals. So, chances are, you’re looking for something to give you an edge.
What about finance? Taking an interest in home loans could give you an edge, because if you can help a buyer qualify for a loan or even move up a price bracket, you’re one step closer to making a sale.
That doesn’t mean you should do your broking certificate or become a mortgage expert, but it always helps to know what the mortgage market is doing.
The government regulators have been asking banks to tighten the screws on how much they let people borrow, which means some people now find they can’t get the finance they thought they could.
Lenders also want to make sure buyers will be able to meet their mortgage repayments if rates rise 2 or even 3 percentage points. Anyone that can’t might have trouble getting finance.
The good news is that rates are still at historical lows, and there are plenty of home loans available for owner-occupiers that are under 4 per cent. The RateCity.com.au database shows rates as low as 3.39 per cent, which is a far cry from the average standard variable rates of the big four banks.
| Lender | Product | Advertised rate | Comparison rate |
|---|---|---|---|
| Reduce Home Loans | Rate Buster Standard Variable | 3.39% | 3.39% |
| Freedom Lend | Variable Home Loan | 3.49% | 3.49% |
| Pacific Mortgage Group | Standard Variable Home Loan | 3.54% | 3.54% |
| Online Home Loans | Horizon Home Loan | 3.54% | 3.86% |
| Yellow Brick Road | Rate Smasher Home Loan | 3.58% | 3.58% |
Haven’t heard of those lenders? Didn’t realise that home loan rates were so low?
It’s probably one of the best kept mortgage secrets going around. Australia’s mortgage market is extremely competitive, with more than 100 banks, credit unions, building societies and non-bank lenders fighting for business. There are so many options out there that a lot of lenders fly under the radar. That’s particularly true for smaller players, which know they have to offer extremely low rates if they want to get people’s attention.
A buyer who might not be able to secure a 4 per cent loan with a well-known lender might be able to score a 3.50 per cent loan with a smaller institution. Of course, the cheapest home loan isn’t always the best, but it is certainly an important factor to consider for anyone on a limited budget.
Investors are currently paying higher rates in today’s mortgage market, but there are still a lot of low-rate options for investors who plan to pay principal and interest:
| Lender | Product | Advertised rate | Comparison rate |
|---|---|---|---|
| Queensland Country Credit Union | 2 Year Fixed Packaged Home Loan | 3.65% | 4.48% |
| Reduce Home Loans | Rate Buster Wealth Maximizer | 3.69% | 3.69% |
| Pacific Mortgage Group | Standard Variable Investment Loan | 3.79% | 3.79% |
| Homestar Finance | Variable Rate Investment Loan | 3.79% | 3.83% |
| Switzer Home Loans | Fixed Rate Loan 1 Year | 3.82% | 3.89% |
Of course, you don’t have to memorise all these lenders and interest rates – it’s near impossible to keep track of all the little rate changes that occur each week. But it’s worth getting your buyers to compare the mortgage market through a comparison site such as RateCity.com.au so they know what lenders are offering and find a home loan that best suits them.
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