Industry experts are predicting that we’ll soon see changes to interest rates, so there’s arguably never been a better time to book in for a home loan review.
In the early days of the pandemic, the Reserve Bank Of Australia dropped interest rates to record lows in an effort to keep our economy moving – and it worked. The move did it’s job when it came to supporting the national property market, with February 2021 signalling the biggest increase in the national house price average in seventeen years.
To mirror these updates, March 2021 saw the Commonwealth Bank of Australia announce its lowest ever fixed rate for home loans on two year fixed periods, dropping to 1.9% per annum. The real surprise though was the announcement in relation to the bank’s four-year fixed term. For owner occupiers, the four year fixed interest rate rose from 1.99% to 2.19%, making them the first of the big four banks to hike the four year rate since October 2019.
In the months that have followed, many of the other major banks have already started to lift their fixed rates over two to five year terms. As a result, for both existing home owners and prospective borrowers alike, there’s never been a better time to pencil in a home loan review as a means to stay ahead of the curve.
The Benefits Of A Home Loan Review
In line with the recent changes to loan servicing rules, the Reserve Bank Of Australia governor Philip Lowe also indicated that until inflation and wage growth stabilises, an interest rate hike is unlikely to be seen before the end of 2023. However, that hasn’t stopped some of our nation’s biggest banks such as Commonwealth Bank and Westpac from making slight increases to their fixed interest rates.
Competing on variable-rate mortgages generally makes sense for lending providers, as they can always increase their rates later on – something they cannot do for fixed-rate customers. As such, taking the time to conduct a home loan review is important to ensure that borrowers minimise their exposure to rate hikes and potential risk.
Needless to say, a lot can change in a year – which is why an annual home loan review is always a good idea to ensure that your mortgage is performing at its best. Depending on your individual set of circumstances, a home loan review may offer improvements by refinancing, or your representative may help you to secure a lower interest rate. A more manageable and efficient payment structure could also be introduced, along with many other suggested tweaks if deemed appropriate.
If you’re concerned about interest rates in both the immediate and distant future, it’s worth consulting with the professionals instead of simply hoping for the best. For first home buyers, it’s important to sign up for a home loan product that is ideally matched to your circumstances with the most favourable terms. For existing homeowners, undertaking an annual home loan health check is considered to be one of the most effective ways to carefully assess your overall financial position and identify any red flags linked to your current loan product.
However, undertaking a home loan review is not always about securing the lowest possible interest rate though, as your financial consultant might even recommend an entirely different home loan product if it’s better suited to your needs. It’s for this reason that many people opt to partner with a mortgage broker as a means to explore all possible options – but where do you find one?
Your Guide For Navigating The World Of Home Loans
The big attraction of buying your own home is just that – it’s yours, once you’ve paid back the banks of course. Apart from having somewhere to live, the quest for home ownership is also about having a long term investment strategy. If we’re looking at it from the viewpoint of decades instead of months, generally house prices do rise, and so does the value of your investment.
With a background in banking, finance, business development and project management, there’s no better advocate to have on your team than Nikki Berzin. As a fully qualified mortgage broker and director of Cherry Lending & Finance, Nikki is passionate about all things finance, and empowering her clients with the tools to hit their property goals is what she does best.
If you’re looking to get into your first home, purchase an investment property or even want to look at your options for refinancing, the first step is starting the conversation. Get in touch with Nikki today, or call her directly on 0427 374 155 to bring your mortgage dreams to life.
Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product. Subject to lenders terms and conditions, fees and charges and eligibility apply.
Credit Representative 499652 is authorised under Australian Credit License 389328.
