• Economists believe the Big Four banks will lift their standard lending rates out of cycle within the next year
  • This comes after APRA announced tighter serviceability tests for home loans
  • Head of consumer research at Finder said, “those who aren’t on a fixed mortgage rate should stay alert."

In Finder’s latest RBA Cash Rate Survey, 50% of the economists believe the Big Four (NAB, Westpac, Commonwealth Bank, and ANZ) banks will lift their standard lending rates out of cycle within the next year.

Unsurprisingly, the RBA kept the cash rate on hold during their monthly meeting last Tuesday – something the central bank intends to do until at least 2024.

Head of consumer research at Finder Graham Cooke said a stagnant cash rate didn’t mean home loans wouldn’t get more expensive.

“Data from the RBA shows banks changed their rates seven times during the last stable period. Four of those changes were rate increases and they may well do it again.”

Graham Cooke

This comes after the Australian Prudential Regulation Authority (APRA) announced tighter serviceability tests for home loans, after finding more than one in five home buyers are now borrowing more than six times their incomes.

Mr Cooke said, “Those who aren’t on a fixed mortgage rate should stay alert to any changes from their bank, as it could mean substantially higher monthly repayments.”

Graham-Cooke-Finder
Graham Cooke, head of consumer research at Finder. Image – Twitter.

Refinancing to hurt lenders

The survey found nearly 1 in 3 experts see constant refinancing from mortgage holders becoming an issue for lenders soon.

Australian Bureau of Statistics’ head of Finance and Wealth Katherine Keenan said, “the value of refinancing between lenders was 60% higher in July 2021 compared to a year ago.”

“This reflected borrowers seeking out lower interest rates, particularly for fixed rate loans, and cashback deals across a large number of major and non-major lenders.”

Mr Cooke added, “while home owners are eager to make the most of record low interest rates, lenders are aggressively competing for market share with cashback offers up to $4,000.”

LMI is worth it

43% of the experts believe lenders mortgage insurance (LMI) is good value for buyers looking to get into property sooner.

Mr Cooke said, “there’s no doubt that avoiding paying an LMI premium will save you money, but consider what that ‘saving’ might cost you.

“LMI can add thousands of dollars to your home-buying costs, but it’s still worthwhile in certain circumstances.”

Suggesting if buyers wait an extra year to purchase a property and the value increases by the amount of an LMI, Mr Cooke said it may be better to pay the fee.




You May Also Like

Melbourne property market sees mom and dad builders flock to outer suburbs for the best bang for buck

The cost of building a house in these top 20 suburbs started at $272,944 and topped out at $387,688.

Australian rental market clocks in a near-40% price growth, while wages struggle to keep up

Rents soared by almost 40% across the pandemic, while wages barely clocked in 20% growth.

Gender gap closes? Women outpace men in overall property ownership

Challenges persist for younger women in achieving homeownership, highlighting the need for targeted solutions.

Exclusive: Top five regional New South Wales housing markets revealed, the affordable alternatives to Sydney

Hotspotting has exclusively revealed to TPT New South Wales housing market’s five best regional hotspots for homebuyers and investors.

Experts Corner by The Property Tribune

Ko & NPA partner to launch several co-owned luxury properties at Mermaid Beach, Gold Coast

Ko's partnership with NPA Projects provides more opportunities to co-own off-the-plan holiday residences, including exclusive Gold Coast properties

Continue reading

Top Articles

Perth property market: The definitive guide to buying a modular home

Modular homes, misunderstood as inferior, offer efficient, durable alternatives to traditional construction methods.

The 50 square metre solution getting people into their first homes and delivering an answer to ...

Small, modular homes could be a key part of the broader solution to Western Australia's current housing challenges.

The hardest time ever to buy a house in Australia: How Australian home buying got ...

We're currently in a buyer's market, but that doesn't mean Australian house prices are crashing.