At its board meeting this week, the Reserve Bank of Australia announced it will hold the cash rate at 4.35%. This follows an increase in annual inflation with data last week showing an increase to 3.8% over the year to June.
The inflation data shows he first increase since the December 2022 quarter, with many economists now forecasting the cash rate will remain static until a cut in February 2025.
Prospective homebuyers as well as homeowners will be watching the cash rate over the next number of months. If it goes up, this will likely increase interest rates, impacting people with a variable rate home loan. It could also reduce peoples’ borrowing capacity – whether buying a new property or refinancing.
Borrowing capacity and interest rates vary depending on the lender. This can play a part in which lender you choose to borrow through – whether to take out a new loan or refinance an existing one.
Why it’s important to seek help when comparing and choosing a lender
When it comes to choosing which lender is right for you there are a couple of considerations.
To begin with, understand that all lenders that are authorised deposit-taking institutions (meaning you can keep any savings with them) have the same level of cover by the government. This protects deposits of up to $250,000. So when it comes to the safety of your deposit, there isn’t a difference based on which lender you choose.
The market is also competitive, so choosing a lender because you already bank with them does not mean you will get a competitive interest rate or even the right loan for you. Instead, it is a good idea to compare your options.
Some key considerations when choosing a lender include:
- Loan type: Look at the type of loan that is suited to your circumstances – do you want a fixed rate or variable? Do you want flexibility for repayments? Is an offset account right for you?
- Interest rates and fees: When you know what loan type you are after, you can compare interest rates and fees to understand expected costs.
- Serviceability criteria: This varies depending on the lender. For example, each lender calculates borrowing power differently depending on your circumstances. Some may require different documentation to approve a loan. The loan offering can also vary by lender depending on factors such as your profession, whether you are self-employed and the size of your loan.
- What is important to you?:Lenders also vary with things such as mobile banking, branch availability or customer service.
There are hundreds of lenders in Australia, offering thousands of loan products. By comparing your options you are more likely to find a loan suited to your goals and circumstances, with a competitive interest rate and fees.
The right lender for you could be different to the right lender for your neighbour. A lending specialist can compare them on your behalf and shortlist loans that are in your best interest based on the considerations above – doing the legwork for you.
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.