Trendsetting Mortgages in 2011

Trendsetting Mortgages in 2011

Trendsetting Mortgages in 2011

We can learn a lot simply by looking at what other people are already doing! While it never pays to blindly follow the crowd (you may just find that they're all heading over a cliff), attention to trends in the marketplace is often worthwhile. You can save yourself a lot of time in comparisons by following the wisdom of the majority ... and so today, we look at the trends in home loans that analysts have already noted, and expect to see more of as we exit the first decade of the noughties.

Basic Style Home Loans

People are beginning to realise that flexibility in home loans comes at a price ... and those extra dollars that you pay towards your mortgage each week are actually going into the coffers of banks. Basic home loans generally do not have:

Redraw facilities

Offset accounts

Repayment holiday options

Fee-free options

However, their basic interest rate is usually lower - enough lower that many families save substantial amounts by going for basic home loans.

Variable Rate Home Loans

In the late noughties, when the Labor party was defending the steadily rising interest rates by blaming them on the economy inherited from the Liberals, people were flocking to fixed rate loans. However, the economic climate is much more stable, and it seems that rate rises will be much more measured. As such, people are generally opting for the lower rates of variable home loans.

Mixed Rate Home Loans

There are two relatively new ways of determining interest rates on home loans that have become popular recently:

Capped rate home loans: Where the interest rate will rise and fall in line with the Reserve Bank's cash rate, but will not exceed a preset cap.

Blended rate home loans: Where part of the principle has a fixed interest rate and part of the principle has a variable interest rate.

These options help people hedge their bets, and have both been offered through more lenders, and seen greater take-up in recent months.

Non-Bank Home Loans

Deloitte predicts that non-banks will garner a much larger portion of the mortgage lending market in 2011. However, the financial analysts also see the government's decision to remove exit fees as set to put price pressure on non-bank home loans ... they may end up even cheaper than they are currently!

The Borrower Wins

The upshot of all these changes is expected to be an increase in new mortgage lending of around 5-10% over they year. The mob has spoken, and it believes that 2011 is a good time to take out a home loan ... and the analysts agree.

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