New inflation data has indicated that the Reserve Bank of Australia will most definitely raise rates at the February meeting. Some economists are predicting a 0.50% rat rise but the general consensus feel it will be 0.25%.

I have heard mixed reports as to what the banks will do. As stated in a earlier post that banks are still concerned about high funding costs. The RBA and other commentators suggest their is no need for the banks to raise rates beyond the RBA recommendation. We will just have to wait and see.

Access Economics have claimed that the major banks are likely to under cut the Reserve Banks reccomended interest rate increases as a PR campaign to win back customers. You can read the full story here.

I am never sure that the majors will miss a profit opportunity and coupled with reports of higher funding costs I think it is highly unlikely the majors will increase rates less than the Reserve Banks recommendation.

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%

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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.