Rising mortgage rates

July, 2017

There was a time when the Reserve Bank of Australia (RBA) moved the official cash rate up or down that most lenders would typically follow suit, shifting their mortgage interest rates in the same direction too.

Moreover, when the cash rate was increased, you could always rely on the lenders to pounce, passing the hike onto their customers immediately. This remains the case. On the flipside, when the cash rate is cut by the RBA, lenders often take at least a month to pass on the savings. We haven’t seen a cut since September 2016, but I can almost guarantee that if another cash rate cut eventuates, that the lenders will be slow to pass it on.

Out of cycle cuts

Yet despite the 10-month rate respite, the major banks have increased their rates over the past couple of months. Not only are they penalising investors, who provide public housing, but now owner-occupiers are taking a hit too. Even small business variable loans have increased.

But there is not point getting mad. Rather it’s time to get even with the lenders by shopping around for more competitive rates. Yet, a recent industry study reported that 90% of home owners don’t know their current interest rate[i].

In my book, an even bigger concern is that fact that the average Aussie pays up to 1.75% more interest on their home loan than the lowest rate available. That’s just over $5,000 annually for an average home loan in NSW of about $435,000. It will be less in Tasmania, Northern Territory and South Australia, but you get my drift.

Time to act

You would also be aware that if you have dealt with Our Broker before, that the lowest interest rate is not always the best interest rate. However, when we see research results indicating 90% of Australians don’t know their current interest rate, then it begs the question… when was your last finance review?

If it hasn’t been in the last 18 months, then it is easy to suggest that there may be additional savings we could find for you. While the cash rate has been stable since last spring, it has dropped 100 basis points (1%) in the last 2 years. Moreover, can you be certain your lender has passed these savings on to you, while there could be a more suitable mortgage with your name on it.

Sometimes we don’t even have to change your lender to secure you a better rate. Just ask us and we will negotiate this for you. We also know that your current lender won’t call you and tell you they are offering better deals to new clients. Loyalty to longer-term banking customers seems to have gone the way of the Dodo Bird and into extinction.

The Our Broker difference

Also, your lender will not tell you if there is a better deal with a competitor, be it a Big 4 bank, a credit union, building society or a regional bank. This is the job of a mortgage professional such as Our Broker.

There are many other lenders in the market place and it is our job is to put you in touch with the right lender who can provide you with the right mortgage for your circumstances. As part of our service, we can also guide you through your financial journey, as life and the world around us changes.

To find out how Our Broker can help you improve your financial position, call us today on 1800 913 677.