No quick fix yet for loans

Rate rises pose difficulties for borrowers, says Tassie bank chief

LOCAL borrowers were not yet shifting to fixed interest home loans despite another increase in official interest rates by the Reserve Bank, MyState Bank says.

The Tasmanian lender announced it would increase its variable rates by 0.5 per cent – to 3.79 per cent for its cheapest home loan – from August 15, passing on in full the Reserve

Bank’s rise announced on Tuesday.

The latest hike this week in a series of rate rises from the central bank is designed to rein in rising inflation. MyState Bank managing director and chief executive Brett Morgan (left) said the bank had not yet seen a trend away from variable rate loans.

“With the current market conditions, variable rates remain significantly cheaper than fixed rates,” Mr Morgan said.

“At this stage, given the rate differential, we’re seeing borrowers choose variable rates.”

He said that the current environment was a difficult one for many borrowers.

“While some customers are ahead on their mortgages, for others this will be the first time they’ve been faced with several months of increasing repayments,” Mr Morgan said.

“Over the past month, our customer contact centre conversations are not just about interest rates, but also about cost of living pressures. For any customers concerned about their ability to meet upcoming loan repayments, we strongly encourage they get in contact with us as early as possible, as there are ways we can help out.”

Mr Morgan said the latest rise was unlikely to be the last from the RBA and urged households to be financially prepared.

“It could be a case of making small changes now, such as forgoing a night out and cooking at home, cancelling some lockdown entertainment luxuries and even looking for better deals on purchases,” he said.

“We’ve got some handy tools and money-saving articles on our MyState Bank website.

“For example, our home loan repayment calculator can help with monthly budgeting.”