Low Doc Home Loans interest rates.
Interest rates for low doc home loans can and do vary widely.
Currently there are three year fixed rates starting from 5.57% (CR 6.11%). This low doc home loan is available through non bank channels. It is generally in line with normal home loan rates. Remember, you cannot walk into one of the big four banks and get this loan.
For Low Doc home loans, normally, if the LVR is 60% or less then the interest rate for low doc home loans is similar to or the same as normal home loan rates. When the LVR starts to increase or there is some form of credit impairment that the spread between low doc home loans and normal home loans will start to widen.
Having said that, be careful in regards to which low doc home loan lender you go with. Lenders generally have the right to vary interest rates even after the low doc home loan has started.
There may be a perception that by going though one of the big four banks you will get a good low doc home loan rate.
however, the Commonwealth Bank (CBA) has recently advised its broker network to contact their low doc home loan customers to advise them that the bank will be raising the interest rates for some existing low doc home loans customers by 0.25%
CBA has said that it would be writing to all its existing low doc home customers with loans that were funded before 1 April 2012 to advise them interest rates will be lifted unilaterally. This means even though other rates are falling the rates for low doc home loans customers will increase mid December 2012
How significant is this move for low doc borrowers?
Well, to put things in perspective it is believed that CBA currently has over $5 billion, yes $5 billion worth of low doc home loans on its books.