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Interest rates are at record lows, but they won’t stay this low forever. Don't wait until it's too late to lock in a great home loan deal.
While the cash rate remains on hold for now, economists now believe a rate hike in the not-too-distant future is more likely than not. If you have a mortgage, you should see your local broker to ensure you are in the best home loan product for your needs. For those looking to buy, renovate or invest, now is an ideal time to act.
For the ninth consecutive month, the Reserve Bank of Australia has left the cash rate on hold.
Today’s decision means the official cash rate continues to sit at the historical low of 1.5%.
According to the majority of economists, the Board’s decision was ‘unsurprising’, as the latest economic data suggests the Australian economy is tracking along quite well at the moment.
Business conditions have improved, unemployment remains relatively low, property prices continue to rise across most markets, and inflation has edged slightly higher over the first quarter of 2017 – all of which is good news for the Australian economy.
The latest Monthly Business Survey from National Australia Bank found business conditions rose 5 points to its highest level since the Global Financial Crisis. Meanwhile, data from the Australian Bureau of Statistics shows the unemployment rate is stable at 5.9%.
Furthermore, the latest research from CoreLogic found property values across the combined capital cities rose 0.1% over the month of April. Melbourne, Brisbane and Adelaide were the standout performers, with the capital cities recording dwelling growth of 0.5%, 0.6% and 0.8% respectively.
Finally, the latest Consumer Price Index reading found headline inflation rose by 0.5% over the first quarter for an annualised rate of 2.1% - which sits perfectly within the Reserve Bank’s target band range of 2% - 3%.
Given all of this positive economic data, it is little wonder why the Reserve Bank choose to leave the cash rate on hold for another month.
Of course, just because the cash rate has been left on hold, that doesn’t mean to say we won’t see further home loan changes over the coming weeks.
Quite the opposite.
Over the past few weeks, many of Australia’s lenders have adjusted their home loan pricing and policy.
There are two main reasons for the changes.
Firstly, there is a lot of volatility in the global markets at the moment, which is putting pressure on funding costs. This pressure has ultimately forced many of Australia’s lenders to lift the interest rates on their suite of home loan products.
Secondly, the Australian Prudential Regulation Authority has made it clear in recent weeks that Australia’s lenders need to reduce their level of investment activity.
At the end of March, the prudential regulator told Australia’s banks that they needed to limit their level of interest-only lending to 30% of all new residential home loans.
Generally speaking, interest only loans are favoured by investors. As such, we have seen a number of lenders lift the pricing on their suite of investment loans and/or make changes to their investment lending policies in a bid to stifle their level of investment lending growth.
Of course, while some lenders have been making some significant pricing and policy changes in a bid to reduce their level of investor lending, other lenders have opened their doors to this type of borrower.
If you are thinking about buying an investment property, now is the perfect time to speak to your local mortgage broker. They are across the latest changes and will be able to find you a lender and product that is suitable.
Alternatively, if you have an interest only product and want to find out how the latest spate of rate changes may impact you, speak to your local mortgage broker today.
Whether you are buying, refinancing, upgrading or renovating, your broker can help.
Your broker will find out as much as possible about your circumstances and goals.
Your broker will calculate how much you can borrow and how much you can comfortably afford to repay.
Your broker can compare hundreds of home loans from over 20 lenders, including the big four banks, to quickly narrow down your choices to the ones that best suit you.
Our brokers have a wealth of knowledge that they're only too happy to share.
If you decide to go ahead with an application, your broker will prepare all of the paperwork and support you through the entire process.
Your broker could help you get pre-approval for your home loan so you can buy with confidence.