This week a new tracker mortgage product was launched by Auswide Bank.
The new ‘rate tracker’ style mortgage will track the movements of the Reserve Bank of Australia (RBA) cash rate. If the RBA shifts interest rates up or down, the interest rate attached to the home loan also moves by the same percentage.
Tracker mortgages are a popular loan product internationally, particularly in the UK and Europe. They have been previously tested in Australia by Bankwest in 08/09 and then by a non-major lender in Queensland in 2011, however at this current time Auswide Bank are the only lender in Australia offering a product of this type.
We have outlined some of the pros and cons of tracker mortgages below to give you a good understanding of the potential benefits and risks associated with this type of product:
- During a period of falling interest rates mortgage holders using a tracker mortgage product can benefit from using a product which will see any cuts to the cash rate passed on to them in full; and,
- Lower interest rates will in turn mean lower monthly repayments.
- During a period of rising interest rates mortgage holders will be subject to rate increases in line with increases to the official cash rate;
- Higher interest rates will in turn mean higher monthly repayments;
The variable interest rate offered by a tracker mortgage product may not be the lowest interest rate available to you; and,
- At present lenders are competing more than ever for your business and you may be able to access a lower interest rate with another lender.
Before making any decisions in relation to your mortgage you should seek independent financial advice.
Our finance brokers are available 24/7 to answer any questions you might have in regards to your current home loan solution and whether there is a more suitable solution you could be using.
Please feel free to contact our offices on 1300 663 943 or send us an email with the details of your enquiry.
Key Features and Criteria
We have outlined some of the key criteria and features of Auswide’s new rate tracker loan product below:
- ‘Rate tracker’ home loan that tracks the RBA cash rate;
- Low upfront establishment fee of $300 and no ongoing monthly fees;
- Available for owner occupier home loans of $150,000 or more for purchase or refinance;
- Includes the ability to make additional repayments and redraw;
- To access the product a transaction account needs to be held by the customer with the bank;
- Available for loan to value ratio of up to 80%; and,
- Available from Monday 17th October 2016.
If you are interested in exploring the possibility of using this type of mortgage product, please contact our offices on 1300 663 943 or send us an email to request to speak to your mortgage broker.
Thanks for reading and enjoy the rest of the week guys.
DISCLAIMER: Finance availability is subject to applicant meeting lenders approval criteria, and all approvals are at the discretion of the lender. The information provided in this article is general information only and your personal circumstances have not been considered, you should seek independent advice before making any decisions in relation to your finances.