Perhaps a dumb question, but…
Why should one shop around for good variable interest rates? Could they not change anyway? If Bank A has a better rate than Bank B now is it highly likely that this differential will continue to exist over years to come?
I do acknowledge there is at least a benefit with going with Bank A for the first couple of years you would expect the better interest rate to hold in this period – but I guess I'm more questioning 2years+ timeframes
In the good old days all the banks had the same rates with the same increases in line with the RBA increases, but things have changed in the recent months. I guess there is no guarantee things will stay the same, but you may as well go with the cheapest now, just in case.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You need to also look at the total cost of the loan. What fees are you going to pay . What features does the Loan have. Offset account, repayment allowed ?, Line of Credit available ?, Credit Cards ? , ATM access, Bank branches, Ect.
Hey Mixedup,
This is a bit of a complex question. Essentially, you are right when you say that the bank could change the interest rate at any time. And the best rate today is probably not going to be the best rate tomorrow.
The comparison rate of a lender is a good start. This is a rate that takes the current interest rate and combines it with any monthly or annual fees that would be charged and shows it as a interest rate. If you want to compare the real ongoing cost of different loans this is a good comparison tool.If you're interested in looking at the long term interest rates, it's prob also best to avoid loans that have a 'special rate' being advertised. You want a loan that will start low and stay low, rather than start well and go high later on.
In saying all this tho, I will say (as a gross generalisation) that the big banks generally have the best rates, and that they are less likely to bite you with a big rate rise later. They're also more stable than some of the smaller lenders at the moment. And, in the current market, that can only reflect positively on your interest rate.
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