Can you afford to pay an extra $3241 per month — or almost $4000 per year — on your home loan*? That’s what the typical homeowner in this country may be paying as Aussie banks predict interest rate hikes are just around the corner.
It’s why industry experts are urging homeowners with high mortgage payments to see how much they could save by switching to an ultra-low fixed-term home loan before lenders take these unprecedented rates off the market.
With the official cash rate at record low 0.1%**, Australians have been enjoying low home loan interest rates since mid-2020. But that could change as three of Australia’s largest banks predict official interest rate hikes over the next 18 months.
Australia’s bigger mortgage lender, Commonwealth Bank, says the official cash rate could hit 1.25% by September 2023. According to the ABC, that would mean an increase in the typical variable home loan interest rate from 3.10% to 4.25% — or a $324 per month increase in home loan repayments*.
The good news is that you can refinance to a long-term fixed interest home loan to beat the interest rate blow out. But time is running out. Many banks and lenders have already started increasing four and five-year fixed term rates in anticipation of rising interest rates3.
“Essentially, anybody looking to refinance should do it asap, while rates are low,” says Matt Gatt, General Manager at Home Loans Australia. “And new buyers may want to get their pre-approvals sorted quickly because the market may move sooner than expected.”
Fortunately, Home Loans Australia has lenders that are still offering fixed interest rates from as low as 1.89% (2.94% comparison rate). But that won’t last forever.
That means homeowners only have a short window to refinance to an ultra-low rate fixed term home loan to lock in those savings.
Our specialists at Home Loans Australia compare more than 40 lenders to find a refinancing rate that may enable you to pay off your mortgage quicker.
By acting quickly – and letting our experts do the hard work – you can still beat the predicted interest rate hike and find a lower cost fixed-term home loan.
All views expressed in this article are opinion only and should not be taken as financial advice. Check with a financial professional before making any decisions.
*Based on a $500,000 owner-occupied mortgage at 3.10%. Source: ABC, Commonwealth Bank warns interest rates will rise next year pushing up mortgage costs, 23 June 2021.
** Reserve Bank of Australia, Cash Rate Target, 28 June 2021.
^Rate City, ANZ hikes 4 and 5 year fixed term home loans but cuts 2 year rates, 11 June 2021.