The Reserve Bank of Australia paused its aggressive interest rate hikes in April but signalled it was just drawing breath. Despite this, there may be a glimmer of hope for homeowners, especially those facing the looming fixed-rate cliff.
According to comparison site Mozo.com.au, some challenger banks slashed their fixed-rate mortgage rates this month. While rates of more than 5% will still be a steep jump from the 2s and 3s that many people fixed at in recent years, this suggested that there might be opportunities for borrowers to shop around and limit the “cliff” in front of them.
“This is a great example of competition in the market working for mums and dads,” said Peter Marshall (pictured above), Mozo’s banking expert. “We have seen reductions in fixed rates on home loans of up to 0.6% 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 revealed that 77% of borrowers who will roll off to more expensive variable rates this year were stressed about being able to afford their repayments when their fixed rate expires.
Only around a quarter said they were comfortable about being able to meet the new level of repayments, with half of those having taken the opportunity to save more or make budget cuts during the fixed-rate period.
Some 77% of fixed-rate borrowers were planning to fix their repayments again. Some 32% believed rates were going to further rise. However, a quarter wanted to lock in for just another year until the current economic uncertainty has passed.
See the table below of the examples of fixed rate home loan reductions seen by Mozo.com.au since April 1.
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