At its board meeting this week, the Reserve Bank of Australia announced it will hold the cash rate at 4.35%. This follows an increase in annual inflation with data last week showing an increase to 3.8% over the year to June. This is the first increase since the December 2022 quarter, with many economists now forecasting the cash rate will remain static until a cut in February 2025.

Prospective home builders and buyers as well as homeowners will be watching the cash rate over the next number of months. If it goes up, this will likely increase interest rates, impacting people with a variable rate home loan. It could also reduce peoples’ borrowing capacity - whether building a new property or refinancing an existing loan.

Borrowing capacity and interest rates vary depending on the lender. This can play a part in which lender you choose to borrow through - whether to take out a new loan or refinance an existing one.

Firstly it’s worth noting that the market is very competitive, so choosing a lender because you already bank with them does not mean you will get a competitive interest rate or even the right loan for you. Instead, it is a good idea to compare your options.

Some key considerations when choosing a lender include:

1. Loan type: Look at the type of loan that is suited to your circumstances - do you want a fixed rate or variable? Do you want flexibility for repayments? Is an offset account right for you?

2. Interest rates and fees: When you know what loan type you are after, you can compare interest rates and fees to understand expected costs.

3. Serviceability criteria: This varies depending on the lender. For example, each lender calculates borrowing power differently depending on your circumstances. Some may require different documentation to approve a loan. The loan offering can also vary by lender depending on factors such as your profession, whether you are self-employed and the size of your loan.

4. What is important to you?: Lenders also vary with things such as mobile banking, branch availability or customer service.  

There are hundreds of lenders in Australia, offering thousands of loan products. By comparing your options you are more likely to find a loan suited to your goals and circumstances, with a competitive interest rate and fees. 

At Clarendon Homes our Construction Home Finance Specialists are with you every step of the way. From assessing your borrowing potential to recommending loan options, guiding you through the application process, and ensuring you move in on time, we're here to make your life easier and our service is at no cost to you!

Contact our Home Finance Specialists and discover your borrowing power in under 5 minutes so you can move forward with confidence. Click here for more information.