With the Bank of Queensland becoming the latest lender to increase its interest rates despite the RBA keeping the official cash rate on hold, borrowers have been advised to prepare for the worst.
The Bank of Queensland had resolved to keep its rates on hold until this month’s RBA meeting, but has now upped its rates by 0.1% to join the ranks of the many lenders who have already made an independent rise.
“In this changing home loan environment, the ‘new normal’ could be that lenders shift their home loan interest rates at any time, in any direction, and by any amount,” said Mortgage Choice spokesperson Belinda Williamson.
This ‘new normal’ has seen 45 lenders hike their variable rate home loans by an average of 1.2%, according to Ratecity CEO Damian Smith, adding that “the rates that borrowers pay have been creeping away from the Reserve Bank’s cash rate movements since the global financial crisis.”
“Last month proves that all variable rate mortgage holders are vulnerable to rate hikes, regardless of what the RBA does.”
So what can a borrower do? Williamson suggests preparing for future rate rises by factoring in a repayment buffer of at least one to two percentage points.
And it goes without saying that by shopping around for a new home loan, property investors may be able to ease their monthly repayment burden.
And it appears that a growing number of Australians are going down this route, with the latest Your Mortgage statistics, for example, indicating a 6% rise in the number of property owners who are considering refinancing.
Are you considering a refinance? Visit Your Mortgage for comparisons and calculators, or ask the property investment community in the mortgage and finance section of our property investment forum.
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