Capped rate loans an opportunity

Mortgage manager Opportune Home Loans has launched a capped rate home loan, hoping to attract borrowers who want some protection from rising rates but do not want to give up the flexibility of a standard variable rate product.

Capped rates are rare. RateCity lists only one other lender, BankWest, offering a capped rate product. BankWest launched its capped rate loan last September.

The Opportune loan has a starting rate of 7.04 per cent, a premium of 10 basis points over its standard variable rate, and the current cap is 7.49 per cent for the first two years of the loan.

Opportune managing director Paul Ryan said borrowers were put off fixed rate loans because they were inflexible - monthly payments cannot be varied, there is no redraw and no offset.

Ryan said: "A capped rate loan gives borrowers the flexibility with some security."

Opportune, which operates 14 branches, is funded by NAB, FirstMac and Resimac.