Financial comparison specialist RateCity has published a new study that shows that five years after the worst of the global financial crisis, its still increasingly tough for borrowers, and only better for savers who make it a point to shop around for the best money deals.


The study found that while the move away from the RBA’s centrally determined cash rates by financial institutions towards independent setting of interest rates has had a positive effect on savers, it has come at a higher cost and uncertainty for borrowers.


RateCity found that the average variable rate had increased almost two percentage points above the official cash ate to over three points.


Michelle Hutchison, Spokesperson for RateCity, said while the top savings accounts have grown more competitive, variable rate borrowers have experienced a turbulent five years of interest rate movements.


“Financial institutions have been pushing harder for deposits by keeping their maximum rates relatively high compared to the cash rate. Savers can take advantage of this by shopping around for savings accounts and switching deals when promotional rates expire and the bonus rates drop,” Ms Hutchinson said.


RateCity found lending criteria quickly tightened across the home loan market by mid-2009, after many lenders were offering home loans with minimal deposits, if any at all.


For instance, in mid-2008, RateCity recorded over a quarter (26 percent) of all home loans in its extensive database (out of more than 2000 home loans) with 100 percent loan-to-value ratio (LVR), which means borrowers didn’t need a deposit. By mid-2009, there was only one home loan in RateCity’s database which offered a maximum LVR of 100 percent