Intense competition among lenders means households with mortgages can secure lower interest rates despite the Reserve Bank of Australia keeping its official rate on hold.

Although the RBA this month maintained its cash rate at a record low of 1.5%, there are a number of good deals on offer for home loan customers.

About 180 fixed and variable rate loans fell in September and many offers are now well below 4%, with expectations of further drops in the coming months.

Analysis by financial comparison website RateCity shows that more than 100 variable rate loan interest rates dropped by an average of 0.17 percentage points in September.

RateCity’s database shows that, on a $300,000 30-year owner-occupier loan, the lowest variable rate deal is offered by Reduce Home Loans at 3.35%. On a three-year fixed deal the best offer is 3.59%.

1300HomeLoan managing director John Kolenda says competition between lenders means borrowers don’t need to wait for the RBA to make a move.

“Variable and fixed interest rates offered by the banks are continuing to tumble,” he says. “There is a great opportunity in the current lending climate to get a further rate cut independently of an RBA decision and save money.

“Every variable home loan interest rate should start with the number three and anybody paying more than 4% is paying too much – and that includes fixed rates.”

Kolenda says that, due to the repricing that has taken place over the last six months, many customers are paying more than they should be.

“I suspect many banks are considering future repricing opportunities as they face further pressure from funding costs, additional compliance costs and pressures of return on equity for their shareholders,” he says.

“The good news though for consumers is that any future rate rises will be minimal and they can count on the low interest rate climate to continue for many years.”

RateCity spokesman Peter Arnold says he expects fixed and variable rate home loan deals to fall further.

“While the cash rate is on hold we are still getting home loan cuts as there’s so much competition to get new customers,’’ he says. “If you’ve been sitting on a rate it’s as good a time as ever to get a good deal as there’s a lot of the banks fighting hard for customers.”

This article is courtesy of Hotspotting.