A Complete Guide to Australian Home Loan Interest Rates

Before applying for the home loan in Australia, it is important to know all about the interest rates of the home loan so that you are aware of the charges you are going to repay to the bank along with the principal amount. The Reserve bank of Australia(RBA) is authorised to set the official home loan interest rates based on the economy’s performance. And for this purpose, The RBA takes into consideration various aspects of the economic market such as Customer Price Index(CPI), Retail Sales and Producer Price Index(PPI). The Australian home loan interest rate fluctuates based on the analysis of these data by the board members.

For the benefit of the Citizens of Australia, The RBA has also introduced two types of home loan interest rates and it is completely up-to the loan borrower to choose any of these.

Variable Interest Rate: Most of the people in Australia prefer home loans at a variable interest rate. As the name suggests, the variable home loan interest rates vary with the market and official cash rate. The interest rate rises when the cash rate rises and goes down if the cash rate decreases. The repayment also fluctuates based on the cash rate. These Australian home loan rates are more flexible in terms of repayments.

Fixed Interest Rate: In the fixed interest rate, the interest rate is fixed depending upon the tenure of the overall loan term. Some lenders offer this type of home loan for 1 - 3 years while others may offer it for 10-15 years. One of the most important advantages of taking this type of loan is that you are aware of the monthly payments to be repaid. The cash rate and market conditions hardly affect the payments.

Going for any of these types mentioned above, it is important to have the complete information on market fluctuations and the various conditions involved in each type of the interest. A Mortgage Specialist can assist for this purpose in the best way as they have keep track of the market fluctuations and reading chart to analyse the best option for you. This would not only save your time but will also help you in making a the good decision of having the best home loan rates in Australia.