Mortgage rates set to rise sooner than anticipated
Updated: Jul 25, 2022
Do you remember the last time that you had your home loan reviewed?
If it was more than two years ago, chances are you're still paying a rate higher than the average Aussie.
Last year we saw lenders reduce their interest rates to unprecedented levels; making it cheaper and easier to own a home. For months we were told that these rates would stay low for several years. However, economists and the Reserve Bank of Australia (RBA) are now standing down from their prior predictions as Australia's economy is slowly making a return to normality.
Earlier this month, the RBA announced that the official cash rate would remain at 0.1% for the twelfth month in a row. For the majority of this year they stated their dedication to keep this rate until at least 2024, where they predicted inflation would remain between the two to three per cent range.
In the days leading up to their recent announcement, lenders came forward stating that they would start to increase their interest rates. Duncan Hughes, an Australian Financial Review reporter, mentioned in an article, on the 29th of October that, "...lenders, including ANZ, CBA, NAB and Westpac Group, have increased their two-, three-, four- and five-year fixed rates for owner-occupiers paying principal and interest by up to 35 basis points."
Following this announcement, many homeowners came forward to lock in their mortgage refinance rates. Those who were comfortable to lock in their rate to a fixed rate did so for the certainty of their repayments over their home loan term.
On the second of November, the RBA made their monthly announcement. In their announcement they stated that the cash rate would still be 0.1%. However, they decided to "discontinue the target of 10 basis points for the April 2024 Australian Government bond."
This news is not all discouraging....
Economists have stated that Australia is fast recovering from the economic shortfalls caused by the global pandemic. In fact, the RBA have mentioned that they believe the economy will increase by 5.5% next year. Additionally, the official cash rate will not rise until the rate of inflation is sustainably between the two to three percent range. Meaning, the official cash rate could remain at 0.1% for several months.
Refinancing your mortgage rate
If you're wanting to refinance your mortgage rates before more lenders follow in pursuit of the major banks, we recommend doing so now. As already mentioned, if the last time you had your home loan refinanced was more than two years ago, you could still be paying tens of thousands more in repayments than the average Aussie.
Before more lenders decide to apply hikes to their interest rates, now may be a good time to lock in a rate that is suitable to your circumstances. Our finance specialists are already helping clients across the country to make the most of low interest rates before they're set to increase. In doing so, they've also been able to help clients discover instant equity within their homes produced by the housing market in 2021.
Home equity is a tool that many people like to unlock on their pursuit to creating wealth for their financial future. It can be utilised to fund the purchase price of investment properties that can produce them tens of thousands in dollars every year, which can help them pay off their home loan quicker and set them up for an early retirement.
How to get in contact with our specialists
If you'd like to get your mortgage reviewed, our finance specialists are more than happy to help. Our refinancing service is completely free to you as the consumer. It’s helped many people with their peace of mind in trusting their rate is suitable for their circumstances. Additionally, it’s helped save them thousands of dollars every single year.
Please feel free to reach out by giving us a call on 1300 130 932. Or, click below to book your appointment at your earliest convenience.