Rate hikes could break vari­able trend

Central Telegraph - - REAL ESTATE / FINANCE -

BOR­ROW­ERS re­main faith­ful to vari­able rate home loans for the time be­ing ac­cord­ing to data from Mort­gage Choice.

Ac­cord­ing to the Com­pany’s lat­est na­tional home loan ap­proval data, vari­able rate home loans ac­counted for more than 82 per cent of all mort­gages writ­ten through­out Au­gust 2018 – an in­crease of 0.37 per cent from the month prior, and al­most 4 per cent higher than the 12-month av­er­age.

Bor­row­ers have en­joyed a sus­tained pe­riod of record low vari­able rates, Mort­gage Choice chief ex­ec­u­tive of­fi­cer, Su­san Mitchell said.

❝have In re­cent times, we seen a num­ber of rate in­creases which pre­dom­i­nantly af­fected in­vestors and in­ter­est-only bor­row­ers. Su­san Mitchell

“Au­gust’s na­tional home loan ap­proval data shows that bor­row­ers have con­tin­ued to opt for vari­able loans, how­ever, with three ma­jor lenders an­nounc­ing rate hikes in the last two weeks, this could in­cen­tivise bor­row­ers to fix,” Ms Mitchell said.

“In re­cent times, we have seen a num­ber of rate in­creases which pre­dom­i­nantly af­fected in­vestors and in­ter­est-only bor­row­ers. As in­vestors re­treated from the mar­ket, vari­able rate home loan prod­ucts dom­i­nated as the pre­ferred prod­uct among owner-oc­cu­pier bor­row­ers who make up the big­gest part of mort­gage de­mand.

“How­ever, in the last cou­ple of weeks, three out of the four ma­jor lenders an­nounced they would be lift­ing the in­ter­est rates charged on their vari­able rate loan prod­ucts due to higher whole­sale fund­ing costs. These cost in­creases will im­pact owner-oc­cu­piers and bor­row­ers who may have been com­fort­able to ride the vari­able rate wave, may now look to fix their in­ter­est rate in or­der to pro­tect them­selves against fur­ther rate rises.”

Ms Mitchell said re­gard­less what type of home loan prod­uct a bor­rower has, if they have not re­viewed their loan this year, now is a great time to do so.

“More­over, those who wish to re­fi­nance into a more com­pet­i­tive deal should en­sure they are in a healthy fi­nan­cial po­si­tion in or­der to im­prove their chances of hav­ing their loan ap­proved. For ex­am­ple, bor­row­ers should en­sure they are fi­nan­cially fit and have con­sis­tently paid their cur­rent mort­gage and other debts on time and are able to quan­tify their cur­rent liv­ing ex­penses.”

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