Small lenders are now offering variable rates at up to one per cent lower than major banks, allowing mortgage holders who make the switch to save hundreds of dollars each month,
Australia’s largest independent mortgage broker says.

Loan Market today said the margin between banks’ standard variable rates and other low variable rates had returned to 2007 levels.

Loan Market Group Chief Operating Officer Dean Rushton said it was now possible to get variable rates that were not introductory rates at up to one per cent below the major banks’ standard variable rates.

The one per cent variance translates to over $200 in monthly savings on a $350,000 loan at a 25 year term, he said, and homeowners seeking to ease repayment pain should consider their options.
“Consumers are now in a very good position to seek a lower rate on an existing home loan to make their repayments a little bit easier,” Mr Rushton said.

“With the latest Reserve Bank of Australia (RBA) rate rise and bank movements outside of the rates, it’s now possible to get variable rates at up to one per cent below the banks’ standard variable rates.

“Borrowers should talk to a mortgage broker to assess what the economic benefit would be to move from their current home loan after entry and exit fees are applied.

“All indications are that there will be further rate increases outside of the Reserve Bank in 2010, so it’s a great time to be in a position to negotiate.”

Mr Rushton predicted small lenders would provide increased competition to the major banks in 2010 and encouraged home owners to get regular “health checks” on their mortgage.

“A mortgage is no different to your home, your car or even yourself - routine maintenance and a regular health check are essential to make sure everything is working effectively,” he said.

“A mortgage broker is well placed to review the circumstances of your current home loan and determine whether any changes are needed.

“In perhaps a quarter of health checks, we can establish if a change would be beneficial to the client’s loan arrangements through refinancing. We also assist customers with debt consolidation which can save them paying much higher rates, reduce the term of the loan and potentially dramatically reduce the monthly commitments.

“There are variable rates out there that are well below the major banks and in some cases consumers would be better off looking for one of these deals.”