For borrowers wanting to secure their right mortgage deal in years, interest rates are now looking very good for anyone wishing to move home or refinance on their current deal.
Unless you wish to meet with every mortgage bank or lender in the country, it’s far more effective to set up a meeting with your local mortgage brokers so that they can find the right deal that is appropriate for your needs.
Since the cash rate was cut by the Reserve Bank of Australia recently, banks and lenders have reduced their standard variable rate and because mortgage companies are more prepared to lend money again, feeling the recession is now perhaps past, customers can negotiate good discounts from the variable interest rate on offer from many banks.
This seventh cash rate cut in the past 18 months has seen customers have the option to renegotiate their current deal or move to another mortgage lender to achieve lower monthly repayments.
The majority of borrowers have a variable-rate mortgage rather than a fixed rate deal. With a variable-rate mortgage, the amount you pay each month can go up or down depending upon the standard variable rate that your mortgage company offers, whereas with a fixed rate deal, you know exactly what you are going to pay every month for the next one, two, three or even four or five years.
Should You Stay Away From the Main Four Banks?
If you want the right deal in the marketplace, some experts suggest you should stay away from the main four banks because they offer deals which are not particularly attractive for new or current customers.
The biggest four banks have tried to increase their margins as the cash rate has reduced. The margin is the difference between the cash rate that is set by the Reserve Bank of Australia and the standard variable rate that the bank charges to its customers. Customers are able to arrange a discount from the standard variable rate but it only lasts for a short while before the customer returns to the standard variable rate.
During the last 10 years, the margins have increased by 88%, with mortgages effectively increasing in cost while the cash rate has reduced.
The margins are currently at the largest amount ever seen with many banks still offering a standard variable rate of between 6% and 6.4%.
Your mortgage brokers in Rockingham, Kwinana, Baldivis, and the surrounding area will be able to assess around all of the lenders across the country to find the right deal for you because you have to be aware that when your discount rate finishes, unless you have the finances to renegotiate a deal with your lender at that time, you will move back to the standard variable rate.