53% of Aussies would change holiday plans if home loan rates rose again
Whether you’re planning your next family vacation or a solo backpacking trip, you know that when it comes to saving for a holiday, every penny counts. And with everyone from the big four banks to smaller lenders hiking their home loan rates in recent months, you could be feeling the strain on your purse strings in funding your next great escape.
Research from InsureandGo has found that more than half (53%) of Aussies that have mortgages would change their holiday plans if home loan interest rates rose by 50 basis points, with 16% saying they would cancel their holiday because of it.
And when looking at rate rises of 25 basis points - the equivalent of a single typical RBA rate rise - a similar 47% of Aussie mortgage holders said they would cancel or downgrade their holiday as a result.
“Australians are feeling the ill effects of the recent variable rate hikes, and it comes as no surprise that holiday plans are being compromised,” said Mozo Data Manager, Peter Marshall.
“The good news is that with funding costs remaining relatively stable for the time being, I don’t predict banks will hike their rates again in the near future.”
The research also found that the older the mortgage holder, the less likely travel plans would change. In the case of a 25 basis point rate rise, 74% of mortgage holders over 60 would keep their holiday plans unchanged, as well as 57% of those in their 40’s and 50’s.
“For those reaching the end of their mortgage, rate rises will generally be a softer blow in comparison to those just starting off,” said Marshall.
“Not only are older borrowers often in a more secure financial position than their younger peers, but because they've already paid down a large portion of their loan, they'll usually pay less interest, even if rates rise."
Have your cake and eat it too
With Aussies fearing they’ll have to drop their holiday plans to afford increasing mortgage repayment prices, now’s a better time than ever to consider refinancing to a loan with a more competitive rate and great features.
But before you head over to our refinancing calculator, here are some things to keep in mind:
- Be aware of refinancing fees. Before you refinance your home loan, make sure you’ve got enough funds on hand to pay discharge fees as well as upfront fees for the new loan. In most cases, the value gained by refinancing will far outweigh these initial costs, but it’s good to know what to expect.
- Consider the cost of LMI. If your LVR is still over 80% (you’re borrowing more than 80% of your home's value), you’ll have to pay lenders mortgage insurance every time you switch home loans. This can reach up to tens of thousands of dollars^, so you’ll need to weigh up the financial benefits of refinancing with the cost of LMI.
- Don’t be blinded by low rates. While searching for a competitive mortgage rate is a good start, pay attention to what features your home loan offers as well. Extras that can save you money and shave time off your loan include an offset account, free extra repayments and a free redraw facility.
Ready to say goodbye to home loan rates that keep getting higher? Head over to our home loan comparison tool to compare rates and features and find one that’s right for you.