Spring is traditionally one of the most active periods for real estate buying and selling. Therefore, as the weather warms up, so too does lender competition.
With record low interest rates holding firm, lenders are already competitive, but this may become even more so over the coming months as big banks and smaller lenders all vie for a slice of the $1.3 trillion mortgage market. Therefore, home loan price competition is expected to intensify with larger discounts being offered on variable rates and the mortgage market offering lower fixed rates.
For borrowers, this means that they can possibly get better deals. But, be quick. If you don’t take advantage of special offers now, then it may be too late.
Apart from low interest rates, lenders are also electing to offer borrowers further incentives to use their services, such as vouchers, fee waivers and cash bonuses. For instance, the National Australia Bank (NAB) recently offered new borrowers a $1,000 gift card when they took out a new variable principal and interest home loan to the value of $300,000.00 or more. This offer was valid between September 22nd and October 31st with the loan having to be drawn on by January 30th 2015. The NAB introduced this incentive to attract a larger share of the mortgage market during the strongest season for home loan applications.
The Big Four banks — ANZ, Commonwealth, NAB and Westpac — are said to control approximately 80 percent of the mortgage market. Home loans are a big portion of this with approximately 3/4 of bank loans being used for housing. These banks are currently offering some of the lowest interest rates on fixed and variable home loans ever witnessed. However, it’s not just the big four who are using these tactics, other lenders are also using similar incentives, as well as other tactics, to attract new borrowers.
Other lenders offer cash-back incentives, similar to the NAB and have waivered fees, which can add anything from $500.00 to $1,200.00 to the cost of a home loan. While the Macquaire Bank offers home loan rewards that are linked to Qantas Frequent Flyer points. Customers taking out a $500,000.00 home loan can earn 160,000 points over 5-years.
However, if you’re looking for a home loan, then you need to be aware that these incentive offers are only being offered for a limited time. Therefore, if you wish to take advantage of these offers, then you need to do so within the offer term.
Of course, before you take out a home loan, it is recommended that you compare the costs of the loan and its interest rate. Then you need to weigh-up if the incentive can save you money. If not, then consider other products that will.
Do you want to know more about competitive home loans? Then contact eChoic, our brokers have access to 100’s of products, so we’ll help find you a competitive mortgage rate.