![Financial experts send a message to home buyers: Catch behind the fixed mortgage rates fall. Photo: AFR Financial experts send a message to home buyers: Catch behind the fixed mortgage rates fall. Photo: AFR](/images/transform/v1/crop/frm/silverstone-feed-data/ea41bdce-3f92-4482-8bf2-b2d7d44a14e5.jpg/r0_0_729_410_w1200_h678_fmax.jpg)
![Lowest variable rate mortgages. (Source: Finder.com.au Information correct as at 24/07/14. Mortgages have no ongoing service fees; some require a deposit of at least 20%; ranked by lowest advertised comparison rate.) Lowest variable rate mortgages. (Source: Finder.com.au Information correct as at 24/07/14. Mortgages have no ongoing service fees; some require a deposit of at least 20%; ranked by lowest advertised comparison rate.)](/images/transform/v1/crop/frm/silverstone-feed-data/d81325a3-5697-4947-9e18-ff4994ab9777.jpg/r0_0_729_410_w1200_h678_fmax.jpg)
With one hand the banks giveth, and with the other they taketh away. This is the warning of financial experts, who say banks are charging account fees on home loans that can erode any savings from record low interest rates.
CBA, NAB and Westpac cut rates on some of their fixed-rate home loans this week, including slashing their five-year fixed rates to 4.99 per cent.
It is the first time the big banks have offered five-year fixed term home loans under 5 per cent. They are the keenest five-year rates in the market.
However, those thinking of taking advantage of the low fixed rates should perhaps hold off as Peter Arnold, the product director at comparator website RateCity, said smaller lenders are expected to follow with cuts to their fixed rates.
Consumers need to be careful not to be lured on the basis of mortgage interest rates alone, said Michelle Hutchison, a spokeswoman for comparator website finder.com.au. She said fees and charges can add thousands to the cost of the loan.
Some of the trickier fees have been removed or reduced in recent years, making it easier for consumers to assess the true cost of the loan. Early exit fees, which could be thousands of dollars for terminating a variable rate loan in the first couple years, were banned on mortgages taken out from the middle of 2011.
However, there will likely be a one-off establishment fee of up to $800 and there could be an ongoing mortgage service fee of a few dollars a month. Many of the lowest interest rates are only available to those who sign up to a lender's wealth package, which usually costs up to $400 a year.
Sometimes with a package the establishment fee is waived and customers receive discounts and fee waivers on the lender's product range.
Ms Hutchison said home buyers paying the annual package fees should make sure they are using the other products of the lender or they may end up paying the fee for nothing.
She said there are signs the fee reductions enjoyed by mortgage holders since the global financial crisis may be over.
Reserve Bank data shows for the year to June 30, 2013, revenue from mortgage fees rose 0.4 per cent on the previous 12 months.
The rise in mortgage fees revenue does not mean fee levels have gone up as there has been an even bigger increase in mortgage debt. However, the era of rapidly falling fees may be over, Ms Hutchison said.
Home buyers should always consider the full cost of a mortgage as well the interest rate before signing, she said.
Analysis by RateCity shows the big bank five-year rates are the cheapest in the market, even after accounting for fees.