Out of cycle rate hikes by many Australian lenders is concerning first home buyers, new data has revealed.
According to Mortgage Choice
’s annual First Home Buyer Survey, more than half (57.5%) of Australians planning to purchase property in the next two years are “very concerned” or “somewhat concerned” about lenders moving interest rates independently of decisions made by the Reserve Bank of Australia (RBA
Mortgage Choice chief executive, John Flavell, said the major banks have increased their variable rates by an average of 18 basis points in our of cycle rate hikes.
“To put these rate increases into a dollar figure, an 18 basis point rate increase would see a home owner’s monthly mortgage repayments climb by more than $45 on a $400,000 mortgage with an interest rate of 5.43%.”
While many potential first home buyers are understandably concerned about the idea of the banks raising their rates independently of the RBA, Flavell said it was important to remember that even with this latest rate hike by some of Australia’s lenders, home loan rates continue to sit at 50 year lows.
“Now is still a great time to be a first home buyer as there are plenty of incredibly competitive, sharply priced products they can choose from,” he said.
The data also found that one in five future first time buyers didn’t even realise the banks could or would move rates on their own terms.
“When you consider that 18.3% of first time buyers didn’t know the banks could move rates independently of the Reserve Bank, it is clear there is more work to be done to help improve the financial literacy of Australians. Anyone planning to get their foot on the property ladder needs to understand the role and power financial institutions have on the rise and fall of interest rates,” Flavell said.