Following its July meeting held this afternoon, the Reserve Bank of Australia (RBA) has kept the official cash rate on hold at 0.25% as was widely expected.
However, despite this being the fourth consecutive month the rate has remained unchanged, lenders of all sizes have been cutting both their fixed and variable offerings in a bid to draw in new home loan customers.
As such, it is crucial brokers are regularly checking in with their existing customers, according to Raj Ladher, home loan specialist at YourMortgageBroker.
“Like most of us, borrowers are time poor and although reviewing their mortgage may be on the ‘to do’ list, it can easily be 6, 12, or even 24 months before it's actioned,” he explained.
“As part of their service offering, brokers should be checking in with their clients to see how their rate is faring against the market, especially at the moment.
“Borrowers may feel refinancing is too difficult, but it is the broker’s job to understand the client’s circumstances, explain the pros and cons of taking action and do all the heavy lifting in making it a seamless transaction.”
Ladher also said that, despite their somewhat limiting parameters, “it’s now difficult to ignore fixed rates” as they have begun dropping below the 2.0% mark.
“Brokers need to thoroughly run through the limitations fixed rates have so clients’ future plans aren’t hampered but, with most if not all lenders offering split rates and even some fixed rates with an offset account, most borrowers should be able to achieve having a rate in the low 2s while still having the flexibility of making overpayments and redraw,” he said.
Recent housing market data has shown a significant slowdown in activity as Australians wait for the economy to stabilise before making any large property decisions; according to Sarah Megginson, managing editor of Australian Broker, Your Investment Property and Your Mortgage, the strategy makes sense as the impact of the cessation of government COVID support has yet to be felt.
“As we cautiously move towards a further easing of restrictions, confidence is slowly returning to the economy. However, even as positive sentiment returns and trade begins to ramp up, there is still a big question mark around what will happen at the end of September when the JobKeeper initiative and other stimulus packages are set to come to an end,” she explained.
“The government has already shown that nothing is certain and they have an appetite to pivot, with their recent removal of JobKeeper across the childcare sector. The end of JobKeeper is only 11 weeks away and a lot could change between now and then.”
Like Ladher, Megginson has encouraged mortgage holders to use the interim to review their finances and ensure they’re not overpaying.
“Anyone with a 3 in front of their mortgage has the potential to do better,” she said.
“Debt right now is the cheapest it's ever been, which means there's a real opportunity to make strong headway with your loans and get your finances in shape."