As you may have seen in the media, Australia’s major banks recently increased their variable rates across all residential loans. This comes on top of the recent rise for investment related products.
This is effectively an out of cycle rate increase similar to the Reserve Bank, which will solely benefit the lenders and their shareholders. Westpac was first to move and then we saw most other lenders follow suit.
This increase will add around $1000 in interest per year for every $500,000.
So what to do?
Fixed rates have yet to change and many are comparable or lower than the variable rates. This gives you an option to lock in a rate and repayment for up to 5 years. There are, however, severe restrictions on fixed rate loans so be sure to contact us to ensure that you understand and are completely comfortable with this strategy prior to making any sudden changes.
Smaller Banks & Non Bank Lenders - An Option!
Smaller banks and non bank lenders are offering their most competitive mortgages in years, meaning they are back on the table as a real option against the big four. Being smaller institutions there are limitations on their products. For example, they may not be able to complete an equity release, offer a construction loan, or accept additional repayments during a fixed term. Given the varying policies that come with each lender, it is imperative that we consider your plans for now and the future to find the best fit.
The home loan market is undergoing massive changes at the moment with the government and lenders making new announcements every few weeks it seems. As your advisor, we want you to know we are here to provide you up to date information and advice, so you can make the right decision on what is arguably the biggest financial arrangement of your life.