Since May 2022, the Reserve Bank of Australia have increased the Cash rate to 3.10% after 8 consecutive rate rises to combat the highest inflation in three decades. With this, lenders across the market have increased their interest rates in line with the announcements each month. This subsequently has resulted in loans attracting higher interest rates in Australia.

What do rate rises mean for you as a consumer?

Essentially, commercial banks will have to pay a higher rate of interest on their short-term loans, an increased cost which they pass on to their consumers. Basically, the increase in interest rates means that it will be more expensive to borrow money from the bank. This may sound scary, however as mentioned before, it aims to stem the inflation growth by decreasing spending and therefore slowing down our economy.

Within the current financial environment, we have seen a very slow market with many buyers hesitant to purchase due to the interest rate increases. Many consumers have refinanced their home loans to source lower interest rates and lenders that better suit their individual circumstances. Investors however continue to aggressively pursue the market. We have seen many second-tier lenders coming to the market with some excellent interest rates including lenders such as UBank, ING, AMP and Macquarie.

What are your options for managing rate increases?

Here at Financia we think outside the box. Our Mortgage and Finance Brokers dig deep to better understand your individual circumstances. We scrape beneath the surface helping us accelerate loan outcomes tailored to you. Whether you are ready to purchase your first home, invest in the property market, consolidate debt, purchase a new car, or refinance your loan. Financia are here to help you!

Recently the broker market share broke a 70% milestone. Mortgage Brokers facilitated 71.7% of all new residential home loans between July and September 2022. This is the first time mortgage broker market share has exceeded 70% in the 40 consecutive quarters the measure has been tracked. A total of $94.4 billion in home loans was settled by Mortgage Brokers. Which is also the highest figure observed for a September quarter and 1.08% year on year increase.

If you are worried about interest rates and the increase of the repayments on your loan, you should speak with your Mortgage Broker to find out what the best steps are. Maybe it’s time to review your loan to see if you are eligible to refinance your mortgage and find a lower rate. Refinancing may also give you the option to consolidate debt, cash out equity in your home, lower your monthly repayments, reduce your loan term and/or find a lender with features that work best for you.