Have we seen the home loan peak?
A GLIMMER OF HOPE FOR HOMEOWNERS FACING THE FIXED RATE CLIFF
12 April 2023
- 77 per cent of fixed rate mortgage holders are stressed about how they are going to meet higher repayments
- 77 per cent want to fix their interest rate again
Wednesday 12 April 23: The Reserve Bank of Australia paused its rate rise campaign in April, although the Bank’s Governor has signalled he is just drawing breath. But there may be some hope on the horizon for homeowners, especially those facing the looming fixed rate cliff.
The comparison site Mozo.com.au has seen some of the challenger banks reduce their fixed-rate mortgage rates in April. While rates of over 5 per cent will still be a steep jump from the 2s and 3s that many people fixed at in recent years, it does suggest that there might be opportunities to shop around and limit the ‘cliff’ in front of them.
Mozo’s banking expert Peter Marshall said, “This is a great example of competition in the market working for mums and dads. We have seen reductions in fixed rate home loans of up to 0.6 per cent by some of the smaller lenders in the past two weeks.
“Competition is fierce right now so, if you are looking to fix your loan repayments, it’s well worth the ‘shoe leather’ to do some comparisons on our site, and to pick up the phone and drive a hard bargain with lenders.”
Research by Mozo showed that 77 per cent of people with fixed rate mortgages are stressed about being able to afford their repayments when the fixed rate period ends.
Only around a quarter of people are comfortable that they will be able to make the new level of repayments, with half of those having taken the opportunity to save more during the fixed rate period, or are bracing themselves to make budget cuts in other areas of their lives.
Over three quarters (77 per cent) of fixed rate borrowers would like to fix their repayments again. Nearly a third (32 per cent) believe rates are going to continue to go up. However, a quarter want to lock in just for another year until the economic uncertainty we are facing now has passed.
Examples of fixed rate home loan reductions seen by Mozo.com.au since 1 April 2023
Notes: Rates correct as at 11 April 2023.
Vanessa Puli: firstname.lastname@example.org 0416623377