Want $5000? How the mortgage war for your home loan is heating up

It’s the biggest expense in many household budgets, and mortgage interest rates are on the move again.

The Reserve Bank has not changed its official cash rate in over a year, but a competition war has broken out in recent months between lenders looking to attract new borrowers – with some offering so-called “cash back” offers of up to $5000.

Westpac this week also made history by slashing its variable interest rate payable on new loans to just 1.99 per cent – the first of the big four to offer a variable rate with a “1” in front. There are a few catches. The deal only lasts for two years, before reverting to a higher variable rate of 2.49 per cent. To qualify, you must meet the criteria of intending to live in the property as an owner-occupier, agreeing to make both interest and principal repayments and to have a loan to value ratio of 70 per cent or less.

However, at the same time, Westpac actually increased the interest rates payable on its new fixed interest rate loans with four- and five-year terms.

What is going on and how can you score yourself a better mortgage deal?

Today on Please Explain, personal finance editor John Collette joins Jess Irvine to discuss.

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