The Reserve Bank has left the cash rate on hold again in March at a record low of 2.0 percent.
Interest rates on home loans are staying at historically low levels.
HOME loan customers are being warned not to get sucked in by “phantom interest rates” which turn up being higher not long after signing up.
Multiple institutions across the country have hiked their interest rates in recent months despite the Reserve Bank of Australia keeping the cash rate on hold at two per cent.
The head of mortgage broking firm 1300homeloan, John Kolenda, said he has seen customers getting gouged by lenders offering rock-bottom rates on variable loans but then subsequently increasing them.
“We are seeing signs in the market that there are a number of lenders using phantom rates in order to capture market share and clearly those rates are now sustainable because of the cost of funding,’’ he said.
“Now is one of the most confusing times I’ve seen in my 22 years in the way lenders are moving so differently.
“There are some rates that are commercially unsustainable and are below the four per cent mark, I don’t see how you can get a sub 3.9 per cent rate (and it be sustainable).”
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Reserve Bank Governor Glenn Stevens forecast earlier this week that if rates were to move it would be down. Picture: Renee NowytargerSource:News Corp Australia
There remains multiple fixed and variable rate home loan deals available to customers below the four per cent mark.
According to financial comparison website Finder.com.au’s database there has been 18 variable home loans hike their rates during December to March.
Some lenders increased their rates by as much as 20 basis points despite the RBA failing to budge.
These increases of 20 basis points on a $300,000 30-year home loan cost the customer an extra $35 a month or more than $12,000 over the life of the loan.
FBAA CEO Peter White said it was disgraceful in some cases new borrowers are getting better deals than existing customers. Picture: SuppliedSource:Supplied
Finance Brokers Association of Australia’s chief executive officer Peter White said it was “disgraceful” in many cases new borrowers were often able to get better deals than existing borrowers.
He said loyalty means nothing — lenders continue to move their headline rates upwards despite no cash rate move.
“Unfortunately the moving of rates around is something that isn’t unheard of,’’ Mr White said.
He encourages borrowers to seek assistance on their loans by meeting with a mortgage broker.
The Australian Securities Exchange’s Reserve Bank RateTracker, which monitors market expectations of a rate fall, forecasts a 12 per cent chance of a rate drop in April.
EMAIL: sophie.elsworth@news.com.au
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