• Reserve Bank of Australia says that the election won’t stop us raising rates Wednesday 21st July 2010
• Inflation the key to rate rises RBA
• Lenders may increase rates independent of RBA due to higher funding costs – Monday19th July 2010
• 95% loans are still available
• Interest rates remain on hold at 4.50% – Tuesday 6th July 2010

More to come…

The RBA cited a stabilising of the world and Australian economy was the main reason for keeping rates on hold for the second straight month.  Australian rates have more room to move downward if there is a relapse in the local and global economy.

Some economists still believe that the official cash rate will be at 2.5% by the end of 2009. We will have to see how global economic conditions fair for the remainder of the year.

Commonwealth Bank – 3 Year Rate Saver – $0 loan service fee for new borrowing

Homeloans – $0 upfront for their Premium Full Doc Loan

St George Basic Variable – Low rate at 4.99%, no up front and ongoing fees for new customers only.

Westpac – .20% discount on all fixed rates under Premier Advanatge Package. Nil upfront fee for Flexi First Option Home Loan for first home buyers.

Economists expect interest rates to remain on hold as signs of the global economy begin to steady, however, their is a bias for rates to be reduced later in the year.

Further rate reductions will depend on the outlook of global and local economic conditions. If it begins to worsen again then the Reserve Bank may reduce rates again. For now it is a wait and see approach.

The Reserve Bank will provide its outlook for Australia this week and this may indicate a hint where they see interest rates for the remainder of the year.

The question is will the banks also pass on the 0.25% reduction onto its customers. The banks are still citing that the cost of funding is high but no matter which way we look at it they will all follow each others lead and offer similar rates across the board.

None of the major banks can afford to discount their rates significantly more than the others as they risk being inundated with applications that they cannot service. So each lender will move cautiously to avoid stressing their systems.

I will keep you updated on which lenders pass on the 0.25% and publish them as they come in.

UPDATE: Lenders passing on the rate cut

CBA – 0.10%

NAB – Nil claim they cannot afford it

ANZ – 0.10%

More to come as they release their intentions to the market. I expect the other lenders to follow ANZ and CBA

Westpac – 0.10%

St George – 010%

Suncorp – 0.10%

ING – 0.10%

While there was debate amongst economist about March interest rate cuts,  it seems that the RBA have left rates on hold to see how their aggressive rate reductions over the last 6 months  and the Government stimulus package affects the economy.

Glenn Stevens the RBA governor said that demand in Australia has not weakened as much in other countries. He also commented that mortgage rates and business loan rates are at low levels by historical standards. As for future rate cuts he did say that they “will consider their position again at its  next meeting.

It seems the flow on effect of world economic events have not passed onto Australia. The RBA are taking a wait and see approach to assess how our domestic economy is affected by overseas events in the months to come.

News came out today that GE Money will not be passing on the recent 1% rate cut claiming the high cost of funds on the wholesale markets. That’s funny to hear because many other non bank lenders are not feeling the same pinch as GE Money. I believe they want their customers to refinance and refinance quickly by making them pay at least 2% higher than any other bank.

There is one condition to their offer, it is only available for a three month period from March 1, 2009 to May 31, 2009.

If you are looking to refinance from GE Money to a reputable lender please contact us as soon as possible.

You can do one of the following

 Call 1300 726 136 and a professional mortgage consultant will find you reputable lender

Complete an online quote form or

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As we know that the Reserve Bank of Australia cut interest rates by 1%. Analysts are predicting further rate cuts in March and after Easter. How much the RBA will reduce rates will depend largely on global and local economic factors.

Most lenders this time round passed on the full rate cut. Whether they continue to do so is “under constant review” as stated by many of the major banks.

Updated below are the better home and investment loans for February showing interest rates from lenders with the most competitive offerings. Please note that home loan rates have very similar pricing to investment loan rates.

Introductory Rate Home Loans

St George Professional Package  – 4.39% first year then 5.19%, Comparison Rate = 5.33%

NAB – 1 Year Discounted Variable – 4.65% first year then 5.74%, Comparison Rate = 5.71%

RAMS Home Loans – Rate Relief – 4.69% first 2 years then 5.29%, Comparison Rate = 5.22%

Bank West Rate Tracker – 4.92% first 3 years then 5.68%, Comparison Rate = 5.53%

Basic Variable Home Loan

Heritage Building Society Basic Loan – 5.07% – Comparison Rate = 5.09%

RAMS Home Loans – 5.09% – Comparison Rate = 5.12%

St George Basic Home Loan – 5.17% – Comparison Rate = 5.20%

Professional Packaged Home Loans (Recommended for $250K plus borrowers)

Commonwealth Bank Wealth Package – 5.04% – Comparison Rate = 5.22%

ING Home Loans – Smart Pack – 5.13% – Comparison Rate = 5.15%

Westpac Home Loans – Premier Advantage – 5.21% – Comparison Rate = 5.41%

Low Doc Loans

Commonwealth Bank Low Doc – 5.04% – Comparison Rate = 5.22%

ANZ Home Loans -  Simplicity Plus – 5.21% – Comparison Rate = 5.23

Westpac Home Loans – Premier Advantage – 5.21% – Comparison Rate = 5.41%

Line of Credit Loans

Commonwealth Bank  - 5.09% – Comparison Rate = 5.22%

Suncorp Line of Credit – 5.20% – Comparison Rate = 5.35%

NAB Home Equity – 5.22% – Comparison Rate = 5.33%

Fixed Rates

St George 3 Year Fixed – 5.49% – Comparison Rate = 5.47%

Westpac 3 Year Fixed Rate – 5.49% – Comparison Rate = 5.49%

NAB 3 Year Intro Fixed Rate – 5.49% – Comparison Rate = 5.86%

RAMS  5 Year Fixed – 6.29% – Comparison Rate = 5.91%

Need Help

The loans mentioned above may not be suitable for your lending needs. Please contact us of submit an online enquiry.

Important Notes

 The interest rates mentioned are only available on the date published and are subject to change.

Comparison rates are based on a $250,000 loan for 25 years. This Comparison Rate applies only to the example or examples given. Different amounts and terms will result in different Comparison Rates. Costs such as redraw fees or early repayment fees, and costs savings such as fee waivers, are not included in the Comparison Rate but may influence the cost of the loan.

It will be interesting to see if the banks pass on the full interest rate cut. Politicians can huff and puff about major lenders passing on the full savings but it will be entirely up to the CEOs to make that decision.

I will keep you updated over the next week or so on the latest offerings from Australia’s major lenders and how much of the latest rate reduction they will pass on to consumers.

Westpac and ANZ have passed on the full 1.00%

Early this morning (4th Feb) NAB and Commonwealth Bank have also reduced their rates by 1% passed on to customers on the 13th February

I expect other second tier banks and lenders to follow suit. I will keep you updated.

ING have passed on 1%

RAMS will pass on 1% by the 9th

Suncorp have also passed on the full 1% but customers will have to wait until the 23rd

Bank West have also passed on the full 1%

It looks like all lenders have passed on the full 1% rate cut. However, news reports have intimated that all the big four banks are constantly reviewing their interest rate policy. This might mean that they might not pass on the full rate cut at future RBA meetings. We can only wait and see…

Keep an eye out in the next week or so to see how these lenders compare with their product offerings.