Where to Get the Best Deals on Home and Auto Loans Right Now

The Reserve Bank of Australia (RBA) left the cash rate on hold once again at an all-time low of 0.10% this week, as more lenders begin to raise fixed rates by 4-year mortgage loans.

And investors have started to lead the charge for new home loans. The value of new loans to investors is rising as homeowners begin to pull away from an increasingly unaffordable housing market.

Meanwhile, the used car market has really heated up thanks to the limited supply of new vehicles, with Australians questioning whether it is more affordable to buy a used vehicle or just wait for a new model.

Let’s take a look at how interest rates have changed or are expected to move in May 2021.

To Repair or Not to Repair

While RBA Governor Philip Lowe continues to assert that interest rates are unlikely to rise until 2024 at the earliest, several lenders have increased their 4-year fixed mortgage rates.

The RateCity study shows that there are only six 4-year fixed rates below 2% in its database, up from 32 at the start of the year. No 5-year fixed rate is currently less than 2 percent.

But it looks like short-term fixed rate options still retain a competitive advantage, with the number of 2-year fixed rates below 2 percent doubling to 71 year-to-date. The number of 3-year fixed rates also nearly doubled to 49 in the same time frame.

If you are a first-time buyer or refinancing considering a fixed mortgage rate, this may be worth considering. Factor in a potential rate hike of at least 2-3% in your budget before locking in a fixed mortgage rate.

Lowest fixed mortgage rates in the RateCity database

Source: RateCity.com.au. Lowest owner-occupant mortgage rates, data correct as of 05.05.2021.

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Investors beat homeowners

As the housing market continues to warm up across the country – particularly in Sydney and Melbourne – we may start to see homeowner demand receding.

The latest CoreLogic National Home Value Index figures for April show home values ​​rose 1.8% last month. Home values ​​have grown 6.8% nationwide in the past three months and 10.2% above the Covid low seen in September 2020.

As prices continue to rise, first-time homebuyers may begin to feel left out of the market, causing investors to re-enter the market. And the latest Australian Bureau of Statistics (ABS) loan indicators for March may show it.

ABS loan figures released yesterday show the value of new investor loans rose 12.7%, or $ 878 million, month-over-month in March (according to seasonally adjusted data). In comparison, homeowner loans for first-time home buyers fell 3.1% month over month.

For the growing number of investors, there are competitive interest rates if they’re willing to shop around, with a number of home loans offering investors rates below 2%.

Lowest mortgage rates for investors on the RateCity database

Source: RateCity.com.au. Lowest mortgage rates for investors, data correct as of 05.05.2021.

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Bonus points for credit cards

The RBA spot rate has historically done very little to change credit card interest rates, and May was no exception. Australian card users expect the average credit card rate to be between 16 and 17 percent.

But new value for customers can still be found through credit card bonus points during registration. There are a lot of things to consider when purchasing a new card, including interest rates and fees, but enrollment reward points can be an attractive perk for some customers.

Keep in mind that cardholders will need to meet strict eligibility criteria to qualify for these credit cards, as bonus points may have conditions around minimum spend to be eligible.

Highest Credit Card Signup Bonuses on RateCity Database

Source: RateCity.com.au. Data correct as of 05.05.2021.

Some of the most competitive credit card signup bonuses on the RateCity database

Restricted Australians turn to used vehicles

Used vehicles have seen a bit of a rebound in recent months, in part thanks to travel restrictions and the limited supply of new vehicles globally.

The latest Datium Insights-Moody’s Analytics price index from March showed wholesale used vehicle prices up 5% in the first quarter of the year, with current prices now 37% higher than the peak of the year. ‘before the pandemic established in February 2020.

Growth in March was the slowest quarterly increase in the past four quarters. However, quarterly growth is still faster than previous figures recorded by Insights-Moody’s Analytics over the past decade.

If you are considering purchasing a used vehicle, it is important to keep in mind that interest rates tend to be more competitive for financing newer vehicles. Generally speaking, this may be because used cars have more wear and tear than new cars and are less likely to last the term of a car loan.

That being said, here are some of the most competitive used car loans for you to get behind the wheel today.

Lowest Used Car Loans in RateCity Database

Source: RateCity.com.au. Data correct as of 05.05.2021.

Some of the Lowest Used Car Loans in the RateCity Database

Source: RateCity.com.au. Note: Based on a used car loan of $ 30,000 over 5 years. Data correct as of 05.05.2021.

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