Out of cycle rate hikes concerning FHBs

by Julia Corderoy30 Nov 2015
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. 


  • by Regional Broker 30/11/2015 9:18:02 AM

    We are not seeing this as much in my region, as blocks are cheap and that makes affordability easier, what is really needed is for all state governments and the FEDS to look seriously at First Home Buyers having strong incentives to build or buy. Yes many say its false, but it actually does works and is revenue neutral, as every sale, purchase, build has some GST revenue in it.

  • by Papery 30/11/2015 10:00:12 AM

    It may be a great time if your a first time home borrower for the product options but thats contradicted by the stupidly expensive house/land prices making it a terrible time to be a FHB.

  • by James 30/11/2015 2:55:13 PM

    Pick any country where the dollar is worth more than AUD like USA and still their houses are much bigger, nicer and cheaper than what can be found anywhere in Australia. Like all first home buyers we believe property is overpriced and find it interesting how London (UK), Sydney(Australia) and Toronto(Canada) are all facing similar issues and all predict property to slow down or crash between 2016-2018. So why are they the most expensive cities in the world? what do they all have in common that's created gen-y to cry over property being overpriced?