Interest rates over the holiday period will likely remain stable until the Reserve Bank of Australia meets in early February. There were talks of a January meeting but it seems that its significant rate cut of 1% at their last meeting seemed to do the trick.

Economists are predicting that rates will continue to fall in 2009 but by how much it is any bodies guess. This will largely depend on how the world economic crisis flows through to the Australian economy.

Updated below are the better home and investment loans 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

NAB – 1 Year Discounted Variable – 4.99% first year then 6.29%, Comparison Rate = 6.77%

RAMS Home Loans – Rate Relief – 5.69% first 2 years then 6.29%, Comparison Rate = 6.22%

Bank West Rate Tracker – 5.82% first 2 years then 6.68%, Comparison Rate = 6.57%

Basic Variable Home Loan

Heritage Building Society Basic Loan – 6.07% – Comparison Rate = 6.09%

RAMS Home Loans – 6.09% – Comparison Rate = 6.12%

St George Basic Home Loan – 6.17% – Comparison Rate = 6.20%

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

Commonwealth Bank Wealth Package – 6.04% – Comparison Rate = 6.22%

ING Home Loans – Smart Pack – 6.13% – Comparison Rate = 6.15%

Westpac Home Loans – Premier Advantage – 6.21% – Comparison Rate = 6.41%

Low Doc Loans

Commonwealth Bank Low Doc – 6.04% – Comparison Rate = 6.22%

ANZ Home Loans –  Simplicity Plus – 6.21% – Comparison Rate = 6.23

Westpac Home Loans – Premier Advantage – 6.21% – Comparison Rate = 6.41%

Line of Credit Loans

Commonwealth Bank  - 6.09% – Comparison Rate = 6.22%

Suncorp Line of Credit – 6.20% – Comparison Rate = 6.35%

NAB Home Equity – 6.22% – Comparison Rate = 6.33%

Fixed Rates

BankWest 2 Year Fixed – 5.19% – Comparison Rate = 6.64%

Westpac 3 Year Fixed Rate – 5.49% – Comparison Rate = 6.21%

NAB 3 Year Intro Fixed Rate – 5.49% – Comparison Rate = 6.50%

BankWest 5 Year Fixed – 6.19% – Comparison Rate = 6.65%

Important Notes

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

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.

The credit crisis has had a profound effect on how lenders look at their lending policy. Most lenders are making it tougher for borrowers to borrow funds and the case is no different for low doc loans. For those looking to borrow between 60 and 80 percent of the proeprties value they will find that interest rates will be higher and they will need to provide more documentation than ever before.

The main reason for this is that the mortgage insurers have dramatically changed their policy when it comes to low documentation lending.  The new criteria is a follows;

- No Upfront Cash Out (up to $20,000 for some lenders)

- No Refinancing Investment Loans

- No Debt Consolidation

- 12 Months’ BAS Statements from ATO Mandatory

- GST Registration for at least 12 Months

Previously, when applying for a low doc loan it was a simple matter of signing a declaration stating how much you earn, you are self employed, the low doc applicant is the primary income earner, have an ABN for 1 or 2 years and if you earned over $75,000 be GST registered.

There is some good news and that is not all lenders are governed by the mortgage insurers. At the moment there is only one major bank that is still offering low doc home and investment loans under the old policy. Other lenders that work outside the mortgage insurers policy charge higher than normal rates and fees.

Time will tell if and when these lenders will change their policy in the future but for now it is more of a wait and see approach. I expect that the policy will tighten more as the economy tightens to reduce the risk of borrowers defaulting on their loans.

To find out more about low doc home and investment loans feel free to contact us