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A variable interest rate can move up or down over the course of your home loan’s term. These changes are usually reflected in your repayments, which can make long-term budgeting with a variable rate loan more unpredictable than a loan with a fixed rate interest period. Two Queensland-based finance stalwarts were among the few Australian home loan lenders cutting home loan interest rates this week. On the surface, there are effectively no differences, however, variable rates can change at any time, while fixed rates can be subject tobreak fees if a borrower decides to refinance. So while comparison rates can give you a simple way to compare loans, think of them more as guide than gospel.
Comparison rates are still represented as a percentage but provide a clearer way for you to work out the true cost of a home loan over time. “We will continue to review our rates as we balance the needs of home loan and deposit customers,” Ms Hatton said. Suncorp Bank has responded to the Reserve Bank of Australia’s cash rate decision.
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These comparison rates apply 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 cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates for Interest Only Fixed Rate home loans are based on an initial Interest Only period equal in length to the fixed rate period.
Depending on the purpose and size of your loan, Suncorp may provide finance of up to 95% of your property value. This amount includes Lenders Mortgage Insurance if applicable, possible bank fees and some government fees. Suncorp is the latest lender to buck the trend of out-of-cycle mortgage rate hikes, with the likes ofHeritage Bank,Teachers Mutual Bank,andAdelaide Bankreducing rates by up to 92 basis points. Mr Mickenbecker added that Suncorp’s decision to price its investment home loans was also a response to weakened demand from investors.
A simple guide to home loan interest rates
In the past week, Suncorp and Horizon Bank cut fixed home loan rates for both owner occupiers and investors by up to 30 basis points. If interest rates fall, don’t automatically jump ship to take advantage of lower rates. Fixed rate loans usually have break fees, so paying off a fixed rate loan early means you’ll likely have to pay an early exit fee – which may be substantial. There are clear rules for how lenders calculate their loans’ comparison rates. This ensures they provide more of an “apples to apples” comparison.
Comparison rates for Interest Only Variable home loans are based on an initial 5 year Interest Only period. While lenders like banks set their own home loan interest rates, in Australia these are often impacted by movements of the official cash rate set by the Reserve Bank of Australia. Over time, home loan interest rates go up and down based on economic trends like inflation and growth. Banks will offer different rates for different types of home loans and different levels of lending risk. A fixed rate loan gives you the certainty of a fixed interest rate and minimum repayment amounts for a set amount of time. Banks typically offer fixed rates for terms between one and five years.
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When you’re in the market for a home loan you’ll see all sorts of interest rates, including comparison, fixed and variable. It’s important to understand what these terms mean when you’re thinking about what loan is right for you. Suncorp Bank will reduce variable interest rates by 0.25% per annum for home loan customers following the Reserve Bank of Australia’s cash rate decision today. Suncorp Bank has announced fixed mortgage rate cuts of up to 70 basis points, effective for new business from 21 March. As of October 3rd, just over 20 Australian lenders have announced plans to cut home loan interest rates. Two days on from the Reserve Bank of Australia's decision to cut rates, and we've only seen a small group of lenders announce rate cuts.
This is a packaged home loan and has a promotional rate for borrowers who apply by 30 November 2020. We’re committed to protecting your personal information and providing you a safe banking environment. This feature is available on the Standard Variable home loan, using our Everyday Options account when the account if on Offset Mode. The Home Lending Interest Rate Guide also contains all standard interest rates used for the calculation of our Special Offer Interest Rates.
Note both of these lenders' cuts are for borrowers paying principal and interest (P&I), and Suncorp's cuts are for its packaged loans. Any advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before you make any decision regarding this product. When shopping for a home loan, you’ll usually have the option to choose between fixed and variable rate options.
At expiry of the fixed rate period, the rate will revert to the applicable Standard Variable Interest Rate less any applicable margin discount specified in your credit contract. The Interest Only period on a Fixed Rate must equal the Fixed Rate term. If you’re looking to learn more about what type of home loan rates and features could be right for you, get in touch. Our home lending experts can help you understand your options and all consultations are 100% obligation-free. Whether you want to get pre-approval, a new loan or refinance your existing loan with Suncorp, you can apply quickly online.
When the fixed period ends, your loan switches to a variable rate . To get a better sense of what a comparison rate involves, take a look at the related “comparison rate warning”. Lenders use these to help give you a better idea of how a comparison rate is calculated.
There are often more limited features available during a fixed rate period, such as no ability to offset and restrictions on making extra repayments. But depending on your circumstances, being able to lock in a good rate for a couple of years might be more important to you. When you’re looking at comparison rates, know that comparing them isn’t always easy. A comparison rate only applies to the specific example loan given, won’t include all loan-related costs or benefits, and they may not reflect how you plan on using your loan. “We have a strong track record of offering the most competitive home loan and savings rates in the market and many of our customers continue to receive the benefits of our competitive products and offers. Reflecting on Suncorp’s changes, comparison website Canstar’s group executive of financial services, Steve Mickenbecker, said that the bank has responded to a moderation of wholesale funding costs.
