It was a quiet week on the mortgage market with the 2024-25 Federal Budget taking centre stage in the financial markets.

Federal Treasurer Jim Chalmers had long promised he would be providing cost-of-living relief without fanning the slow-burning flames of stubborn inflation.

It's a hard tightrope to walk and many analysts believe he erred too far on the side of slinging money into the economy for short-term gain and longer-term pain.

What did the Budget mean for mortgage holders and homebuyers?

The big question is: how is the Budget likely to affect interest rates?

It seems more than a few commentators have taken issue with the $300 energy bill rebate being delivered to all households, regardless of their income.

Some are saying it's a blatant attempt to lower a key measure of CPI inflation - electricity - and Dr Chalmers himself says Treasury forecasting now puts inflation at the target range of 2-3% by December this year.

But wait, that's a whole year ahead of the Reserve Bank of Australia's forecast.

Could Dr Chalmers be setting the stage for an RBA interest rate cut in the lead-up to next year's federal election?

Mortgage holders and homebuyers may well be pleased but some analysts say even if it happens, there will likely be further rate rises down the track as the RBA tackles inflation again as the Budget sugar-hit - and the stage three tax cuts - filter through the economy.

See: How will homebuyers benefit from the 2024 Federal Budget?

Time will tell so, in the meantime, let's check the movements on the mortgage market this week.

Fixed rates on the up

After several months of fixed rate home loans generally heading lower, the tide has turned in recent weeks.

At the start of the new year, there was a general expectation that interest rates would head south some time in 2024.

Some analysts had even been so bold as to predict a mid-year dip in the cash rate but as the year has progressed, inflation has proved stickier than anticipated.

In fact, its latest quarterly reading showed it had risen by 1% for the March quarter, taking the annual rate to 3.6%, still well above the RBA's target zone.

It seems lenders are no longer trying to lure borrowers with lower fixed rates in anticipation of a rates cut.

In any case, the latest data shows only 1.4% of new home loans, by value, were at fixed rates in March.

BoQ hikes fixed rates

Australia's sixth-largest bank (by assets) upped its fixed rate schedule this week by up to 45 basis points.

Bank of Queensland's best new fixed rate is still under the 6% mark at 5.99% p.a. (6.40% p.a. comparison rate*) for a Residential fixed rate loan for three years with a loan-to-value ratio (LVR) 80-90%.

That one comes with an advertised 35 basis point discount, but the catch is you'll need lenders mortgage insurance (LMI) which can add substantially to the cost of a home loan.

Here are BoQ's new owner occupier discounted fixed rates for principal and interest (P&I) loans <80% LVR:

Product Change (%) New rate Comparison rate*
Residential Fixed 2 years Discount rate <80% +0.2 6.09% p.a. 6.45% p.a.*
Residential Fixed 3 years Discount rate <80% +0.1 5.99% p.a. 6.40% p.a.*
Residential Fixed 4 years Discount rate <80% +0.25 6.24% p.a. 6.46% p.a.*
Residential Fixed 5 years Discount rate <80% +0.25 6.34% p.a. 6.39% p.a.*

HSBC lifts fixed rates by up to 30 basis points

The London-based bank that had its origins in Hong Kong and Shanghai also has some owner occupier fixed home loans still under 6%.

HSBC's discounted Home Loan Package P&I loans fixed for one to four years are now at 5.99% p.a. for LVR 60-80% (comparison rates*: 6.53% p.a. one year; 6.52% p.a. two years; 6.50% p.a. three years; 6.48% p.a. four years).

Package home loans come with no establishment, valuation, or settlement fees for an annual fee of $390.


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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
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5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
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6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Image by Aiden Frazier on Unsplash





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