Interest rates have been kept on hold at 4.1% for the third consecutive month following the Reserve Bank meeting today (5 September 2023). The decision also completes Governor Lowe’s six year tenure at the helm of the Reserve Bank.
Inflation has continued its decline following the previous interest rate increases, softening to 4.9% in July. Inflation is still above the target inflation range of 2% to 3%. This means that if inflation doesn’t continue to decline, there is still a chance the Reserve Bank could look to increase interest rates future.
Prior to Michele Bullock taking over the reins as Governor of the Reserve Bank, currently Governor Lowe noted that the Reserve Bank needed time to “assess the impact of the increase in interest rates to date and the economic outlook”.
He further stated that “returning inflation to target within a reasonable timeframe remains the [Reserve Bank] Board’s priority.”
All four of the major banks in Australia predicted a hold on interest rates with only NAB predicting one more 0.25% interest rate increase this year.
Mortgage holders in Australia have been hit with a significant number of mortgage rate increases over the last 18 months. Based on an average home loan value of $500,000 monthly home loan repayments have increased by just over $1,000.
There are still opportunities to reduce your mortgage repayments by looking at moving bank. A number of banks are still offering mortgage cash back offers on moving your mortgage and are generally providing a more competitive mortgage rate to entice customers to their bank.
How do I work out my mortgage repayments?
If you’re looking for a better deal on your mortgage and you want to know what a difference rate can make, check out our Mortgage Repayment Calculator. Enter in your current mortgage details and then play around with the interest rate and see what a difference saving a percent or even half a percent makes.
How much can I save by switching banks?
Mark Waller, Managing Director of One Click Life advised that “we are seeing customers saving between 1% and 2% by switching their mortgage regularly. This is translating to savings of over $4k a year on average sized mortgages whilst still seeing $2,000 cash back at the time of settlement of the mortgage. We expect the mortgage cash back offers to cease in the near future, but they are still providing a great enticement while they exist.”
What other strategies are there to combat high interest rates?
A mortgage broker can assist on preparing a strategy to target the current higher interest rate environment. There are a number of strategies that can be deployed including;
– Home Loan Offset Accounts
– Move to a weekly or fortnightly repayment cycle
– Refinancing your mortgage
– Use your home loan for debt consolidation
– Reduce other expenses A mortgage broker can advise on these strategies and help implement them.
What is the role of a Mortgage Broker?
A Mortgage Broker will help and advise you through the process of taking out a mortgage or moving from one lender to another lender. There is no cost to you, the borrower for using the services of a mortgage broker. They act on your behalf and are a transaction consultant and personal financial guide through the process of purchasing a home, or moving lender.
Looking for a Mortgage Broker?
One Click Life is a mortgage broker that can help you select the right lender for your needs.
We have a team of qualified mortgage professionals to help you select the right mortgage and importantly the right mortgage rate and other terms commencing with a simple home loan application process.
One Click Life can also take care of your Taxes, Will, and Health Insurance, so you can enjoy the more important things in life.
One Click Life creates simple financial products for you.