Headline-grabbing home loan deals may not provide the best savings

But the "headline-grabbing" deals may not provide the best savings, experts have warned.

The Commonwealth Bank last week struck a major blow with a no-fee home loan for customers with a 20 per cent deposit or mortgage insurance. That included potential savings of $600 on the application fee, $700 on exit fees and $8 a month on account keeping.

The offer came after competitors abolished their $700 exit fee and various account-keeping charges.

But John Symond, of mortgage broker Aussie, said there was too much "noise", "trickery" and "marketing" distracting people from the facts.

"The no-fee deal on face value sounds really interesting," he said. "But there are cheaper interest rates out there. You have to find the cheaper interest rates that don't have the fees."

Mr Symond said the best deals were generally not with the big four banks.

"People go there because they couldn't be bothered they look at the headline deal and say, 'This looks all right' and then they find themselves in the future with hefty charges," he said.

RateCity CEO Damian Smith agrees that borrowers should focus most on finding the lowest possible interest rate.

"The no-fee home loan compares favourably on fees to other products from the big four banks, We’d expect some of them to counter with similar fee reductions, which is good news for borrowers," Mr Smith said.

"However, borrowers should always remember that ongoing interest rate is a more important factor in the real cost of their loan over time, so make sure you check the rate as carefully as the fees."

The ANZ was the first to abolish the $700 exit fee across all home loans in November.

The NAB followed suit and then a fortnight ago it offered to also pay the exit fees of customers switching from the CBA and Westpac, a move duplicated by Westpac for business customers.

Westpac and the CBA have not yet abolished exit fees.

The CBA is waiving its $600 application fee on new home loans while Westpac offers discounts on fees and products.

The ANZ, which fired the first salvo in November, said yesterday it was not interested in what other banks were doing.

"It's not a war," a spokesman said. "We've been doing this the whole time. We have a clear strategy to focus on the customer. We've been consistently growing market share as well as improving customer satisfaction."

A Commonwealth Bank spokesman said:

"It's a competitive market out there and by getting rid of fees, it makes it simple for everyone."

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