The Reserve Bank of Australia’s (RBA) most recent meeting has uncovered that the cash rate has increased eight times this year alone. From 0.1% to 3.1%, this is the fastest pace increase seen in a very long time.
What does this mean for you and your home loan?
It is well-publicised that just over one-third of Australian mortgages are fixed rate and half of these are due to mature within the next year. To break it down, anyone who was lucky enough to secure a fixed-rate home loan during COVID-19 of approximately 1.99% will likely see their loan increase to over 6% in the new year.
The consensus is showing more rate rises on the horizon, even as early as February 2023, so it’s essential to take the time to evaluate and start preparing your finances.
Kaine Frew, one of our Senior Financial Advisers, has shared some practical tips that borrowers should consider if they find themselves in this situation:
- Start saving now to create a buffer
- Run the numbers to understand what your new repayments will look like
- Start living as if your rate has increased already. This will ensure you have a good idea of what your cash flow is going to look like prior to your fixed rate rolling over.
- Negotiate a new rate with your current lender (start this process early because we all know what banks can be like)
- Keep an eye on the fees
Another option is to find out if refinancing is possible. Shop around, speak to a specialist, and if you need help, the team here at Diamond Partners can lend a hand. We have an extensive network of lenders we deal with regularly and are happy to sit down for a chat or pass on recommendations to potential mortgage brokers or lenders.
If you have any questions, please get in touch today.