Canstar shares outlook on mortgage rates; mixed bag of home loan rate movements

Analyst notes the impact of inflation in December

Canstar shares outlook on mortgage rates; mixed bag of home loan rate movements


By Jonalyn Cueto

The 0.6% inflation rate for the December quarter has effectively deterred any immediate plans the Reserve Bank may have had for raising the cash rate, according to Steve Mickenbecker (pictured), finance expert at Canstar.

“Inflation looks on track towards the two to three percent target band and any unexpected setback aside, the next cash rate movement will be down,” he said.

Mickenbecker highlighted the impending struggle for mortgage holders, noting that even if interest rates have peaked, they may have to endure further financial strain before experiencing any significant repayment relief.

He noted the impact of recent rate hikes, pointing out that 13 increases since May 2022 have raised repayments on a $600,000 loan over 30 years by up to 62%, equivalent to an additional $1,562 each month for households.

“Householders owe it to themselves to negotiate a lower repayment now, rather than sweating on the Reserve Bank to lower their interest,” said Mickenbecker.

Looking ahead, Mickenbecker predicts a resurgence in buyer activity driven by expectations of lower interest rates and escalating property prices. He notes a significant increase in new investment lending for December compared to the previous year, highlighting growing concerns among first-home buyers about potential market exclusion due to affordability pressures.

Home loan rate movements

Recent home loan rate movements reflect a mixed picture of adjustments among lenders, catering to both owner-occupiers and investors.

Two lenders opted to increase rates for both owner-occupiers and investors, resulting in a collective rise of 0.13%. Conversely, five lenders made cuts, reducing 23 variable rates by an average of 0.11%.

Three lenders raised rates across 11 owner-occupier and investor fixed-rate products, with an average increase of 0.15%. Meanwhile, five lenders chose to decrease their fixed rates, lowering 128 options by an average of 0.29%.

Canstar’s database reveals 19 rates below 5.75%, marking a slight increase from the previous week’s count of 18.

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