May 03, 2011
Having already provided current and potential home loan borrowers with a five month salvation period, the Reserve Bank of Australia today announced the country's official interest rate will remain at 4.75% throughout May.
Behind the news, which comes as a lifeline to some, is an increasing buzz about variable rate borrowers needing to prepare for one or two rate rises in the latter half of 2011.
The spokesperson for Mortgage Choice, Australia's largest independently-owned mortgage broker, Kristy Sheppard said, "Many squeezed borrowers will find great comfort in today's steady cash rate environment. We're delighted to see such a long reprieve, the longest experienced since the April to October 2009 pause."
"However, this is likely to be temporary as interest rates are predicted to rise alongside living costs over the next six months. Employment is at a two-year high, petrol and other living costs are rising and the latest inflation figures were up on expectations. The combination of and outlook for these and other economic factors will place mounting pressure on the Reserve Bank to lift the cash rate.
"The ABS March quarter Consumer Price Index shows housing related costs of living in capital cities rose 1.3% in the quarter. The main contributors were electricity, rents and house purchase costs.
"Our advice to those feeling the pinch is to knuckle down and review your finances to see if savings can be made by switching products or re-jigging your cashflow to boost funds put aside for rainy days.
"For mortgage holders, it's usually clever to make repayments as if the loan's interest rate is one to two percent higher. This prepares you for rate increases while building a financial buffer that shaves dollars off the total interest owed and reduces your loan term.
"Lenders are offering an array of fee discounts and incentives to switch loans, more than we've seen in some time. That's why we're surprised our January to April website data shows no increase in the proportion of borrowers indicating the purpose of their enquiry is refinancing. It remains at one in five.
"As talk about upcoming rate rises builds, we expect the interest in researching refinancing to rise."
Borrowers who want to further explore the ins and outs of interest rates can visit Mortgage Choice's infographic: www.mortgagechoice.com.au/tips-and-checklists/interest-rates-infographics.aspx.
Other Mortgage Choice avenues are reached via 13 MORTGAGE.
For further information or to arrange an interview, please contact:
(02) 8907 0472 / 0407 416 124