How much could you save on your home loan by shopping around?

Could you be paying less in interest?

Working out which loan will be the best for your budget can be a tricky process. Take a look at the most up-to-date interest rates on CANSTAR’s database and ask your lender to get your loan in shape.

What are the current interest rates on the market?

Based on our research, the following are the current minimum, maximum, and average floating interest rates at the time of writing, for both owner-occupiers and investors.

Residential Home Loan Market – Snapshot of the current market (29/03/2016)
Floating 1 Year Fixed 2 Year Fixed 3 Year Fixed 4 Year Fixed 5 Year Fixed
Average 5.62% 4.53% 4.64% 4.89% 5.09% 5.21%
Min 5.45% 4.15% 4.25% 4.64% 4.89% 4.99%
Max 5.85% 4.85% 4.99% 5.25% 5.35% 5.40%
Source: www.canstar.co.nz, the search results do not include all home loan providers, and may not include all features relevant to you.

 

Table: Investment Home Loan Market – Snapshot of the current market (29/03/2016)
Floating 1 Year Fixed 2 Year Fixed 3 Year Fixed 4 Year Fixed 5 Year Fixed
Average 5.66% 4.53% 4.64% 4.89% 5.09% 5.21%
Min 5.45% 4.15% 4.25% 4.64% 4.89% 4.99%
Max 6.09% 4.85% 4.99% 5.25% 5.35% 5.40%
Source: www.canstar.co.nz, the search results do not include all home loan providers, and may not include all features relevant to you.

 

How much could you save?

As a rule of thumb, every 25 basis point drop in your interest rate can save around $45 per month on a $300,000 loan. So obviously the more that you owe – and the greater the home loan interest rate discount you can negotiate   – the more you can save!

For example, based on a $300,000 home loan over 25 years, you could expect the following monthly repayments at various interest rates:

Interest rate Monthly repayment
4.25% $1,625
4.50% $1,667
4.75% $1,710
5.00% $1,754
5.25% $1,798
5.50% $1,842
5.75% $1,887
6.00% $1,933

No matter what interest rate you’re currently getting on your home loan, there’s often room for improvement. You can often get a better interest rate or pay less in fees by shopping around, either by switching home loans or by talking to your current lender about what kind of discount they could offer you.

Of course, it’s not all about the rate, which is why CANSTAR’s star ratings also help you compare home loans in terms of features that can make your loan do more work for you. In 2016, we researched and rated 58 home loan products from 10 providers in New Zealand. Take a look and find out where your current home loan sits in the market.

 

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