Transparent Variable Rate Home Loans – It Is Possible

November 13, 2019

Deciding which home loan to choose can be tricky business, particularly when it comes to the stability of a fixed-rate or the flexibility of a variable rate.

Variable rates have traditionally been attractive due to their initially low rate, but how do you know if that rate will remain low? Banks have significant control in the setting of loan rates, and there is little transparency surrounding how these rates are calculated. 

This week, the House of Representatives Standing Committee on Economics has weighed into the discussion of offering tracker mortgages through the four major Australian banks.

Tracker mortgages have rates which fluctuate in line with the official cash rate, so there is transparency regarding how the rate is calculated and fluctuates. However, according to bank executives, it wouldn’t all be good news if this type of loan is introduced.

Brian Hartzer, chief executive of Westpac, and NAB chief executive, Andrew Thorburn, stood opposed. They said that excessive premiums would be attached to tracker mortgages due to the high risk associated with them for the banks. This, in turn, would be unappealing for consumers, who generally opt for a fixed rate on their loan if they are after more security. Mr Hartzer went on to say that if banks offered loans with that much risk, they would be in serious trouble if the cost of funds spiked.

On the other hand, ANZ Chief Executive Shayne Elliott and Commonwealth Bank of Australia Chief Executive and Managing Director Ian Narev, were open to the idea – despite the high risk. Both agreed, however, that they wouldn’t be certain there would be much demand for tracker mortgages due to the high premiums.

They also wondered if the introduction of another loan option would make it more confusing for the consumer.

Finding the best home loan rates can be confusing, especially when you consider the many options and the general lack of transparency associated with many banks and mortgage brokers. Joust removes the confusion and provides unrivaled transparency, which makes the decision process much clearer for consumers.

We bring the banks to you with their best offer and the most relevant information on the table, which means no hidden fees and far less confusion. Providing a marketplace where you and the banks are able to see other offerings provides full transparency, which is often difficult to find when purchasing a home loan. This process is what makes Joust the simplest and most competitive platform to use when shopping for your mortgage.

Find out how Joust works and let the banks come to you with their mortgage offer.