One of the biggest shocks to the financial services community was a decision by government to raise $6.2 billion through a 6-basis point levy on the liabilities of Australia’s five biggest banks. But what does this mean for you?
To offset the impact of the $6-billion levy handed down in the federal budget, the major banks would need to increase their standard variable rates by around 20 basis points and banks have certainly demonstrated their willingness to use out of market pricing to respond to regulatory changes and pass on higher funding costs.
Some good news is that the government has also announced that the ACCC will undertake a residential mortgage repricing inquiry until 30 June 2018. This will require banks to explain any changes or proposed changes to mortgage pricing including fees, charges or interest rates.
And given the competitive nature of the mortgage market, there are plenty of other lenders not caught by the levy so there will be plenty of opportunities to go elsewhere if the banks choose to raise mortgage rates.
Time will tell as to whether the 5 majors pass the cost on through rate increases or potentially reduce rates on offer for deposits.
Whichever way it falls, now is a great time to review your current or future home loan.
There are some fantastic rates on offer with current rates as low as 3.79% Variable with Principle and Interest payments and 3.84% for a 2 year Owner Occupied Fixed rate with Principle and Interest payments. If you are a First Home Buyer, we have one lender offering you a further discount with a 2 year Owner Occupied Fixed rate at a low 3.69%. For further information, please call the team at Mortgage Choice Modbury on 8263 2930.
Keep a look out for our next blog on the rising demand of Fixed rates.