Mortgage of the year

The banks rely on mortgages for massive long-term profits, but when the provider of Mortgage of the Year is announced tomorrow, it won't be a bank.

Today's announcement of a yet another potential interest rate hike has sent fear through Australian home owners.

With the average home loan increasing from $300 000, in December last year to $317,000, this news could spell disaster for some already struggling with repayments.

But there is some good news, mortgage rate competition is the fiercest it has been in 15 years.

Nila Sweeney editor of 'Your Mortgage Magazine' has reviewed nearly 2,000 Australian mortgage products hunting out the best deals in the country... decreasing affordability prompting banks to win buyers back.

"Browers now are in a very strong position to negotiate a good deal," Nlia said.

"For consumers this is a great time to go shopping for a home loan.

"If you go back to your bank lender and say this is what I have from a non-bank, you will find that they are likely to consider and accommodate that," she added.

Comparing both bank and non-bank lender packages - fixed and variable deals, each were assessed on their interest rates and associated costs like account keeping fees. For the third year running, RateBusters secured first place for the best non-bank standard variable deal.

RateBusters General Manager Angela Cooney, attributes the institutions continuing success to their hand over the big banks who she says just can not match their savings.

"It is a win-win, absolutely, you get both of the things that you look for when you're lookign for a home loan. Low cost, low rate and fantastic features," Angela said.

"[The banks] have got massive overheads, they've got profits that they've got to make for the shareholders, we don't have any of that."

Ratebusters took out top places for non-bank variable loan - first place with an interest rate of 6.9 per cent and second at 7.17 per cent, Australian Mortgage options finished in third place at 7.21 per cent.

The Top 3 Non Bank Products were:

1. Ratebusters: 6.90 per cent
2. Ratebusters: 7.17 per cent
3. Australian Mortgage Options: 7.21 per cent.

The Top 3 Bank Products in the same category:

1. Macquarie Mortgages: 7.39 per cent
2. Adelaide Bank: 7.3 per cent
3. Westpac Variable: 8.07 per cent.

But a warning before you contemplate a switch of lender - some banks can charge you around $3000 as an exit fee.

"Do the research yourself. It's easy to do if you know where to look and get the right advice and talk to experts," Angela from Ratebusters added.