Don't take low rates for granted, says RBA official

RBA deputy governor Philip Lowe issued a reminder that people looking to take advantage of the low rates on offer should be careful not to over extend themselves. The senior RBA official was speaking at the CFA Institute Australia Investment Conference in Sydney, reported Your Investment Property.

"People do need to be careful... debt levels can't keep rising faster than income," Dr Lowe said.

Even while Dr Lowe said Australians need to remember that rates can rise easily and should not be taken for granted, Joe Sirianni, director of broking firm Smartline, doesn’t believe a rate rise would have too huge an impact.

“It’s fair for the RBA to caution people and I don’t have a problem with that, but if you look at mortgage arrears and out of orders right now, they’re at really low levels. So at the moment I’d say we’ve got a pretty good base where investors and homeowners will be able to handle a rise,” Sirianni said.

He also added that for most cases, people as well as their lenders have taken steps to make sure they can service their mortgage if rates do go up.

“I think most consumers do their calculations on a higher rate than what they’re actually subject to.

“The banks these days are pretty cautious too. They’ve got a buffer rate they apply and they factor in how rate rises will affect someone when they’re assessing mortgage applications.”

While he cautioned people to be careful they’re not hit by rate increases, Dr Lowe also said an apparent slowdown in price growth could help to mitigate some risk.

“It's too early to be definitive but I think we're on the cusp of seeing the supply response finally kick in, moderating price growth. And I hope that's the case,” he said

"Ideally we would now go through a period of quite modest house price growth. I think that would dim the risk of household balance sheets a little.”

If you’re looking to compare home loans, Mozo’s comparison tool can help you find a good value deal quickly and easily.

Home loan comparisons on Mozo - last updated 23 April 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    Express Home Loan

    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

    Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

    Compare
    Details
  • Flex Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a.
    fixed 3 years
    6.37% p.a.

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

    Compare
    Details
  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

    Compare
    Details
  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.16% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

    Compare
    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.