With every RBA rate rise announcement, mortgage holders brace themselves for impending repayment increases. Here’s how to stay on top of your mortgage and feel financially secure.

Let’s face it, the RBA’s rate rise cycle hasn’t been easy for mortgage holders, with average monthly repayments now hundreds of dollars (and in some cases, thousands of dollars) more expensive than they were a year ago.

Pair this with the rising cost of living and many Australians are eager to bolster their finances to weather the storm, especially as there are one or two more rate rises predicted to come.

But rest assured, there are things you can do to help manage your mortgage and stay on top of your finances.

1. Review your loan

Regularly reviewing your loan can help you assess whether it’s best suited to your current situation.

You may be able to access features that may benefit you such as an offset account. And even get a better interest rate.

Canstar research shows 63% of Australians haven’t attempted to negotiate their interest rate with their lender in the last year.

And only a quarter of those who did were knocked back. But you don’t have to run the risk of rejection yourself.

Get in touch with us and we can go in to bat for you.

And if we don’t think your lender is playing fair, we can help you look elsewhere. Which brings us to our next point…

2. What are competitor lenders offering?

Canstar research shows that 77% of mortgage holders may be paying more than if they switched loans.

And RBA data from November 2022 shows that on average, existing variable owner-occupier home loan rates were 5.29%, while new loans had an average rate of 4.79%.

This is known as the “loyalty tax” – where banks often only pass on better interest rates and features to new customers.

But we can help you out.

Let us do the legwork and find suitable refinancing options so you can save.

3. Avoid the mortgage trap

Before you refinance, it’s good to get a picture of your debt-to-income and loan-to-value ratios.

This can help you avoid being trapped in a mortgage without the ability to switch to a better interest rate.

Your debt-to-income ratio is your total debt divided by your gross income. Lenders use this to assess how you manage money and to calculate your borrowing power.

So if you’re seeking to refinance a $700,000 home loan (and have no other debt), and you have $160,000 in gross household income, your DTI is 4.375 – a ratio most lenders would be very comfortable with.

So make sure your other debts – such as car loans, and credit cards – are being managed, as well as your mortgage. It can help bolster your credit rating.

Your loan-to-value ratio is the comparison between your loan amount and the assessed value of your home.

This means that a drop in your property’s value can affect your ability to refinance.

And thus, if your equity drops below 20% some lenders may not accept your application to refinance. So refinancing at the right time (ie. before prices fall too low) can help you avoid being locked into your current mortgage.

If all this sounds complex or you just don’t have the time, we’re only a phone call away.

4. Track your spending

Like many of us, you’ve probably cut back on spending already.

But there’s a popular saying that rings true: “what gets measured gets managed.” Track your spending and see where additional changes can be made.

It can be a real eye-opener.

You may think “they can pry my daily cafe-bought triple shot latte from my cold dead hand” … but when the cost is tallied up, you may change your mind.

And that streaming subscription you never use and forgot about is still coming out of your bank account like clockwork.

5. Speak to us

Want a hand with all the above?

We can help you to refinance, consolidate your debts, manage application processes, and much more.

Get in touch today and we can help you through the refinancing process, even if there is possibly another rate rise or two to come.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

As property prices start to climb, listings are following suit. So if you’re hunting for a home, what does this mean for you?

If you’ve been looking at the property market over the last six to 12 months, you probably already know that while property prices have dropped, it’s been a case of slim pickings due to the drastically low number of listings.

But prices look like they are starting to bounce back, with March heralding a 0.6% increase in national property prices, according to CoreLogic. And listings are following suit.

PropTrack data for March showed new listings on realestate.com had risen by 10.5% month-on-month, making it the busiest month for new listings since May 2022.

So why has the market changed? And what does it mean if you’re looking to buy?

Property prices and increased demand

When the RBA announced its rate rise pause in April, we all let out a collective sigh of relief.

And many financial and property analysts, including CoreLogic, estimated the pause may give rise to increased prices due to a boost in buyer confidence.

But there are other compounding factors that were influencing the pricing upswing before the rate rise pause.

Record low listings, a competitive and expensive rental market, and elevated migration placed increased demand on limited housing supply.

And prices started to climb despite consecutive rate rises.

Rising prices, combined with the Autumn selling season, have seen vendor confidence pick up and property listings increase.

But how does this affect you if you’re looking to buy?

Opportunity may be knocking

If you’ve been ready to buy but haven’t been able to find the right place due to low supply, now may be the time to purchase – before FOMO starts to kick into the market.

More listings mean you’ll have a greater chance to find a suitable abode, rather than sifting through the dregs.

But before you pounce on that perfect property, it helps to have your finance sorted.

Finding out your borrowing capacity and loan options are important steps when planning to buy.

And while the RBA’s pause bolstered our spirits, it’s wise to be mindful that there are a couple more cash rate rises expected.

Getting advice on the right type of loan, assessing your borrowing power, and organising your finances could make things smoother.

So if you’re keen to purchase in 2023, give us a call and we’ll get cracking on finding you a mortgage solution that will suit your individual needs.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

You’ve probably heard the term “fixed-rate cliff” bandied about in finance news feeds. But what is it? And if you’re about to head over it, how can you prepare for a soft landing?

A staggering 880,000 fixed-rate loans are set to end this year, and when they do, many Australian households will be facing significantly higher mortgage repayments.

That’s because the variable interest rates now on offer are much higher than the fixed rates locked in years ago.

So today we look at what this so-called “cliff” might mean for your budget and how you can reduce the impact by refinancing.

But first, why is the fixed rate cliff looming in 2023?

Before 2020, fixed-rate mortgages equated to about 20% of total Australian home loans.

But during the pandemic, the RBA dramatically slashed the cash rate to a record low of 0.10%, and many savvy Australians pounced on the opportunity to lock in a low interest rate in early to mid-2021 for two to three years.

This saw 2021 fixed-rate borrowing basically double to 40% of total Australian home loans.

However, as with all good things, the low rate times came to an end.

Since May 2022, the RBA has hiked the official cash rate back up to 3.60%.

Those on fixed-rate loans have had a reprieve, until now – with 880,000 mortgage holders set to start rolling off their fixed rate throughout 2023.

And CoreLogic warns “the pain will be felt most acutely from April” this year.

What effects can a fixed rate cliff have

According to CoreLogic data, a mortgage holder who took out an average-sized loan of $538,936 with a fixed rate of 1.98% could see their repayments increase by over $1000 per month when rolling over to a standard variable rate.

Those who locked in 2020/2021 interest rates that hovered around the 1.75 to 2.25% range will be transitioning to interest rates as high as 5 to 6%.

That’s an increase greater than the 3 percentage point minimum interest rate buffer that lenders use to assess the serviceability of home loan applications.

How to refinance (properly)

When a fixed-rate loan period ends, lenders often don’t roll existing clients over to the best rates they have on offer.

The most attractive interest rates are usually reserved for new customers as an incentive.

But by refinancing with another lender you can access lower introductory rates, which can potentially save you thousands of dollars in repayments over time.

Working with a broker like us can take the stress off your shoulders when navigating the end of a fixed rate period.

We’ll use our vast network of lenders to zone in on suitable loans and lenders that are right for you.

And importantly, we’re (happily) bound by a best interests duty.

So while banks and digital lenders might try to tempt you with cashback offers for loan products that may not really be in your best interests (due to fees, high interest rates, and other undesirable loan terms), we’ll only ever try to match you up with lenders and loans that are in your best interests.

Get in touch

Is your fixed-rate cliff looming?

Get in touch today and we’ll get to work on finding you great refinancing options to soften the landing.

And if the landing is still looking a little bumpy, we can help you explore some additional options, such as increasing the length of your loan and therefore decreasing monthly repayments, debt consolidation, or helping you identify ways to build up a bit of a cash buffer in the meantime.

Whatever your situation, the earlier we sit down with you and help you make a plan, the better we can help you manage the transition.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

And … exhale. After 10 straight rate hikes the Reserve Bank of Australia (RBA) has today decided to put the official cash rate on hold. But for how long?

The decision to keep the official cash rate at 3.60% will be welcomed by homeowners around the country after monthly repayments increased by about $1000 per $500,000 loaned (for a 25-year loan) since 1 May 2022.

RBA Governor Philip said the RBA board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date and the economic outlook.

“The Board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt,” he said.

However, while the cash rate was not increased at today’s RBA meeting, Governor Lowe signalled there might be more rate hikes in the coming months.

“The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty,” he said.

“In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.”

How much have your repayments increased since 1 May 2022?

Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.

The wave of 10 successive rate rises means the repayments on your mortgage have increased by about $985 a month compared to 1 May 2022.

If you have a $750,000 loan, repayments will likely have increased $1,478 from 1 May 2022.

Meanwhile, a $1 million loan is up about $1,980 from 1 May 2022.

What happens if the cash rate increases further in future months?

Economists at the big four banks have forecast that the cash rate will peak at either 3.85% or 4.10% in the months to come (so, just one or two more cash rate hikes to go).

Assuming you’re an owner-occupier with a 25-year loan, here’s how much more you could be paying each month if the cash rate reaches 4.10%:

– $500,000 loan: approximately $75 extra per rate rise = up $1135 from 1 May 2022, to a total of approximately $3,470 per month.

– $750,000 loan: approximately $112 extra per rate rise = up $1702 from 1 May 2022, to a total of $5,200 per month.

– $1 million loan: approximately $150 extra per rate rise = up $2280 from 1 May 2022, to a total of $6,950 per month.

Worried about your mortgage? Get in touch

Despite today’s reprieve, there’s no denying that a lot of households around the country are feeling the pain after 10 successive rate rises.

There are also lots of people on fixed-rate home loans wondering what options will be available to them once their fixed-rate period ends.

Some options we can help you explore include refinancing (which could involve increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

So if you’re worried about how you might meet your repayments going forward, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you manage any further rate hikes.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.