All the talk really is about interest rates at the moment...

Posted in: Insights

11/07/2022

It's a concerning time for some Australian homeowners with the Reserve Bank (RBA) announcing 3 consecutive cash rate increases, and alarming headlines frequenting our television screens and social media feeds. Here's a brief update on how Bernie Lewis Home Loans sees the current loan market.

Fixed Rate Market

The fixed rate market is looking fairly expensive compared to recent years.

In response to forecasts of economic gloom during the early stages of the pandemic, historically low 3 year borrowing rates were on offer, designed to give borrowers some level of comfort for the uncertain times that lay ahead. This essentially allowed banks the capacity to borrow money and lock in a profit margin for a 3 year period, enabling them to offer customers eye-opening fixed rates.

Now that interest rates have begun to sky-rocket in relation to rising inflation, the RBA has been forced to abandon the policy that pinned 3 year bond rates at 0.1 per cent. Consequently, customers are now faced with a fixed rate loan market that is substantially higher than current variable rate loans.

For those rolling off a low fixed rate, the current market options could be quite a shock. It might be time to re-consider variable vs fixed loans and what could work best within your budget.

Variable Rate Market

The new business variable rate loan market remains fairly low for now. This is good news for those looking to buy property, or to refinance their existing lending, as lower rates are available to customers borrowing 'new' money from a lender.

For those homeowners already on a variable rate product, the increases the RBA has made to the cash rate would have mostly likely been passed on by your lender. This could be quite a hit to the pocket, so we suggest renegotiating with your current lender, or looking at what other lenders might be able to offer you.

How long will rates go up for? That's the big question, and it seems what has been forecast during recent years can be retrospectively viewed as being overstated or misguided.

You can check in on some of our lowest rates by clicking here.

Everyday life is looking a lot more expensive across the board at the moment. It’s a time to review your priorities, and ensure the financial commitments that are most important in your life can be met. If we can help you with some of those financial decisions, then please just call the team on 8300 8300.