Last month, the reserve bank warned that the 'growth in housing debt has been outpacing the slow growth in household incomes for some time'. With both wage growth and inflation still below target, all indicators suggest that we are unlikely to see an increase in the cash rate until Q1 2018 at the earliest.
On the first Tuesday of every month (except in January), the Reserve Bank of Australia (RBA) sets the cash rate. They decide whether to raise it, lower it or leave it the same, depending on a number of factors, including the performance of the Australian dollar, the state of the housing market and inflation.
The last time the cash rate rose was in November 2010. Since then, the general trend has been for the rate to remain the same, decreasing only every so often. The last decrease was in August 2016.
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When the cash rate stays the same, you may not see a change in your repayments. However, the big four Australian banks recently started to raise their interest rates for investors and owner-occupiers with interest-only loans, independent of the cash rate. Other smaller lenders are now beginning to follow suit and raise their own interest rates despite the unchanged cash rate.
Keep an eye on your lender’s rate because even the slightest interest rate rise can make a considerable dent in your monthly budget. If you do find yourself struggling with increased repayments, speak to a Lendi Home Loan Specialist about switching your loan to a lower rate option.
If you are on the lookout for a new home, things may be about to improve for you. Following APRA's move to restrict interest only loans to just 30% of new residential home loans settled, the number of investors entering the market is gradually dropping. That, combined with the unchanged cash rate may result in a decrease in auction attendance numbers and ultimately greater affordability for home buyers.
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# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 25 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria. Top rates include lenders who are on our panel and are then defined by the circumstances provided by the borrower.
The Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.
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