Homeowners should be prepared for an interest rate rise in late spring, according to Mortgage Choice CEO after yesterday’s (1 May) announcement from the Reserve Bank of Australia (RBA).
The cash rate was held at 1.50% for the 19th consecutive month, as RBA governor Philip Lowe said that “the global economy has strengthened over the past year”.
Mortgage Choice CEO, Susan Mitchell, was one of the first to react to the RBA’s decision.
She said, “Homeowners should not grow too comfortable with rock-bottom rates and should be prepared for an eventual hike in late springtime.
“The RBA’s decision to hold has come amid good performance in the Australian economy, the unemployment rate falling, business conditions improving, and home loan demand remaining stable. Tighter credit standards have also been helpful in containing the build-up of risk on household balance sheets.
“Of course, as and when interest rates do rise, it is important for borrowers and potential buyers to understand that mortgage interest rates still remain incredibly low by long term standards and most lenders are still offering competitive rates. Now may be a great time for borrowers to fix part or all of their home loans.”
Other aggregators had their predictions on whether the RBA would hold or raise the cash rate this month.
According to a finder.com.au survey 97% of its broker network believed the rate would remain the same.
With a slightly different result, only 90% of HashChing’s broker network thought the same, down from 95% last month.
COO of HashChing, Siobhan Hayden, agreed that there would likely be a rise later this year, depending on inflation and wage growth over the next few months. She said that brokers should be an “advocate for the customer”, at a time when they might be reconsidering their home loans.
She added, “The RBA cash rate staying on hold doesn’t do much to new or existing activity. But with the media in the early part of this year around mortgage brokers and concerns around lenders, particularly the major lenders off the back end of financial planning, you hear that customers are making their dissatisfaction clear. We’ve also had anecdotal feedback from customers who want to move away from the majors. I think at this point in time the brokers’ real value point, as it continues to deepen and grow, is around the advice models, about knowing product and policy across multiple lenders.”