Bank with Lowest Mortgage Rate (Historically)

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  tomleonhart on 08/04/2016 - 11:13

  +3

  Broker here

  For example, I have visited a mortgage broker who is suggesting I go with ING (4.19% comparison rate). However, I have done some research myself and there are cheaper options out there (HSBC are doing 3.99%).

  HSBC 3.99% doesnt include an offset account. The product suggested by your broker ING 4.13% (comparison 4.19%) includes an offset account. You're not comparing the same product.

  The interest rates that applies based on: LVR, amount, purpose, discount, P&I or IO. It's pretty impossible to say who has been the cheapest historically as each loan is different.

  BOQ has been offering 3.99% p.a. (can't remember the comparison rate) for a while now, and just yesterday they announced a rate increase. (http://www.smh.com.au/business/banking-and-finance/bank-of-q…)

  I think it's fair to say that it's best to check your home loan every 2 years as lenders who are not competitive today will try to lure more customers down the track.

  • 

    Sex on 08/04/2016 - 12:06

    Thanks tomleonhart. You're right, I just double checked and the HSBC loan doesn't have an offset account.

    Would you suggest for me to go with the one suggested by the broker and switching down the line if necessary? I guess ING is pretty decent.

    Thanks!

    • 

      Henryneko on 08/04/2016 - 17:35

      Why don't u get another mortgage broker to provide more opinions?
      Tomelhart seems fine…check with him perhaps?
      They don't charge u anyway…AFAIK they charge the bank when u take the loan through them.

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  akyeeeahdude on 08/04/2016 - 12:05

  +1

  I've been watching HSBCs rates since 2010 and I can assure you that they have definitely been more competitive than the big banks. There are lower though - UBANK has been great for a long time.

  • 

    Sex on 08/04/2016 - 12:08

    Thanks! Ive heard UBank, MeBank and ING have all pretty competitive in the recent past.

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  ESEMCE on 08/04/2016 - 12:15

  If there is any possibility that you ever might rent out the property rather than live in it yourself, get an account with an offset feature.

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  oscargamer on 08/04/2016 - 12:23

  +1

  We've been with ingdirect for 8 years. Used the offset all the time. Swapped from owner occupied to rented out and then an investment property. Their rates are very competitive and the features just work. We have negotiated interest rates quite a bit below what is advertised.
  Would recommend them.

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  brickwall on 08/04/2016 - 13:17

  While HSBC's rates might be lower compared to other banks, their valuation is more conservative, so keep that in mind.
  Me & hubby have been HSBC's customer for a long time (around 10 years) and when it comes to mortgage, we decided not to go with them. First because of their valuation and secondly their home loan product was not very appealing. I don't remember exactly but I think when we applied the loan type we are interested in they only had redraw not offset.

  • 

    Sex on 08/04/2016 - 16:09

    Hi moonlite51, could you please explain what you mean by their valuation being more conservative? Thanks!

    • 

      brickwall on 09/04/2016 - 11:30

      Conservative as in their valuation is more strict compared to other banks.
      With HSBC our property valuation came back $20k lower than the purchase price while another bank's valuation matched the purchase price.
      Based on another experience that I know of is HSBC also very strict on low-doc application.

• 

  naritas on 08/04/2016 - 15:00

  +3

  Speaking as credit advisers we've seen the following general trends:

  1. The consistently cheapest lenders deliver at their price point because of strict credit policy, a limited feature set or due to concerns to do with their financial strength (vis a vis a micro lender may have the same features as a major bank on an offset variable - but they typically can't offer the peace of mind that a commonwealth guarantee on deposit funds can - which is only available to ADIs - so they deliver their products at a cheaper price point). For the sake of simplicity this basically translates to: If it looks too good to be true, it probably is! So beware of bait and switch tactics. As others have pointed out, if you are looking for the best price on your finance over the long run be prepared to re-evaluate on a periodic basis - most people who are looking to keep their rate sharp/costs low find the time to do this every 2 to 3 years. Generally speaking, the best pricing at present is coming out of the smaller ADIs and non banks. This doesn't look very likely to change in the immediate future.

  2. There is no such thing as a single price position for a large lender. Most lenders will incentivise types of borrowers they wish to attract. For example, at present many lenders are incentivising owner occupied borrowers with low LVRs and certain industry groups (doctors, vets, solicitors, accountants and engineers, for example). This means that if you're approaching a lender with a low LVR owner occupied scenario and/or you are a professional with a good employment history there is a strong chance you will get an offer that is better than what is being advertised if you ask.

  3. If you told your broker you wanted something cheap and they offered you ING, perhaps you need to ask who that broker has on their lender panel? A good broker has at least 50 lenders on their panel. For some perspective, at Naritas we have over 100. Also, to give you some perspective on ING, 90% of ING's loans are written through mortgage brokers, so there is no doubt that it has been a popular choice amongst broker circles. However, depending on your circumstances, you are right to point out that there are products with cheaper rates and fees - and often from lenders that are less well known than ING (which is a major global brand). That being said, and as others have pointed out, price isn't everything. You will probably want to consider factors such as a 100% offset account (and whether it is worth paying a premium for), credit and valuation policy, whether the package includes bundled card services (again, this may or may not be important to you), quality of internet banking, whether the lender is an ADI, etc. If you were simply chasing a lender with a cheap rate and an offset account, we have seen numerous lenders offering sub-4%p.a. with offset account (and no annual fee options).

  Hope this helps and if you had any other questions please feel free to send us a PM.