When one bank hikes its interest rates, the rest usually follow one after the other like dominos. Here’s the latest information on recent home loan rate rises & how to avoid getting caught up in the chain reaction.
You may have seen the news last week regarding Westpac’s home loan rate rises on their variable home loans. The 0.14 percentage point increase came just days before the Reserve Bank announced that it would keep the official cash rate on hold at 1.5% for another month, extending its record rate freeze to a 25th consecutive month. But as we’ve seen, just because the Reserve Bank keeps the official cash rate on hold doesn’t mean banks won’t make their own business decisions.
Home loan rate rises – The domino effect
Usually when one of the big 4 banks makes a move, the rest soon follow. This week Commonwealth bank have announced an increase of 0.15 to their variable rate home loans and ANZ followed with an announcement of a 0.16 increase to their variable rates. It is expected more home loan rate rises will come from the remaining lenders over the month of September.
What you can do
Ok, so if there’s a good chance that interest rates are on the way up, what can you do? Well, first and foremost you can contact us for a home loan health check where we can run you through the below options:
– Shop around: Lenders are always jostling for new customers with competitive deals. If you haven’t refinanced recently, chances are you may be missing out. Refinancing doesn’t always mean changing banks, either. If you find a better rate elsewhere there’s a chance your current lender might match it.
– Lock in a rate: Rate increase speculation isn’t limited to the big 4 banks. Half of Australia’s leading economists in the nation’s longest running survey – the Business Day Scope economic panel – believe the RBA will lift its cash rate by the end of the financial year. Now might be a good time to lock in a rate you’re happy with.
– Consolidate your debts: If you have a credit card, car loan or other personal loans, you can save money if you refinance and consolidate them into one loan. This will give you one simple repayment to make each month instead of a bunch of them, which can help you avoid late fees. Also, all your debts are charged at the home loan interest rate, which is usually much lower than a credit card rate.
Get in touch
To find out more about avoiding getting caught up in an interest-rate hike domino effect, get in touch. We’d love to help you find a home loan that you’re happy with – regardless of market movements.
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