Mortgage brokers face a tougher environment as lenders continue to lift both variable and fixed mortgage rates, shrinking the pool of cheaper loans available to first-home buyers, and property investors.
Over the past week, dozens of providers have raised rates, squeezing borrowing capacity, and making it critical for brokers to identify sharp deals, and negotiate harder on behalf of clients.
Canstar.com.au’s data insights director, Sally Tindall (pictured), said global and domestic pressures are flowing through to home loans.
“Prices are on their way up as a result of the conflict in the Middle East and while fuel has been the lead instigator, mortgage rates aren’t far behind,” Tindall said.
Those pressures are now showing up clearly in Canstar’s rate data. The average owner‑occupier variable rate for principal‑and‑interest loans now sits at 6.29%, with the sharpest variable on Canstar’s database at 5.19%. Just 43 mortgage rates sit below 5.5%, down from 83 a week earlier, signalling a rapid withdrawal of ultra‑low offers.
Variable rates have risen across the board, with 38 lenders lifting a combined 343 owner‑occupier, and investor variables by roughly a quarter of a percentage point. Fixed rates are also moving, with 26 lenders increasing more than 500 fixed options by around 0.26% as they factor in further cash rate rises.
Tindall highlighted that Westpac now expects a more aggressive Reserve Bank path.
“Not Westpac, mind you. Yesterday, Australia’s second biggest bank increased its cash rate forecast, picking there’ll be not one, not two, but three more hikes by August, which would translate into five hikes in as many meetings, and also the highest cash rate setting in almost two decades,” she said.
For brokers, the opportunity lies in active rate management, and client outreach. Many borrowers who settled loans around five years ago, and have left their rate untouched, may now be paying about 6.78% on a $600,000 balance with 25 years remaining.
Refinancing these clients to a competitive 5.75% rate could cut repayments by roughly $382 a month and deliver savings of more than $11,000 over two years, even after allowing for switching costs.
By contrast, negotiating with the existing lender to trim the rate to around 6.28% can still reduce monthly repayments by about $188, and save close to $6,000 over the same period.
“Borrowers need to start preparing by making sure they’re on a competitive rate now so that if rates shoot up further, they’re at least coming from a decent base,” Tindall said.
With around 40 lenders expected to offer at least one variable rate below 5.75%, brokers who proactively review client loans, pressure existing lenders, and explore refinance options may be able to offset the impact of further mortgage rate rises on households.
Get the hottest and freshest property and mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
