- Finder survey found that over half of borrowers would renegotiate with current lender
- An out-of-cycle rate rise could occur due to the RBA's unlikelihood of raising the cash rate soon
- One in five Australians would do nothing if interest rates rise
5% of Australians with a home loan would require financial assistance if their home loan rate were to increase, according to a survey conducted by Finder.
Given that interest rates are already at historically-low levels (central bank cash rate is 0.1%), it has not much room to fall further, so the next move is likely up.
Last week, The Property Tribune reported an updated forecast from NAB stating that interest rates would remain where they are now for two more years, and would likely rise to 0.5% in the first part of 2024, and from there to 1.75%-2% by mid to late 2025.
The Reserve Bank has reiterated it won’t raise the cash rate for several years.
If, and when this does happen though, the survey found that over half of borrowers (53%) – around 1.5 million people – would try to negotiate a lower rate with their current lender if an out-of-cycle rate rise occurred.
Many Australians have been left ‘debt vulnerable’ by the pandemic, according to Finder home loans expert, Sarah Megginson.
“Over the past 18 months, so many Aussies have seen their financial reserves drained,” she said.
“There’s a real chance that [a] further economic shock could lead to more people falling behind on their mortgage payments.”
Sarah Megginson, Finder
If their interest rate went up, one in four homeowners with a mortgage would consider switching lenders.
Only one in five would do nothing.
Ms Megginson said that regardless of whether or not interest rates increase, homeowners should not shy away from shopping around for cheaper mortgages.
“Mortgage holders have to make hay while the sun shines. With rates at all-time lows and a rising number of cashback offers, conditions couldn’t be much better to save money on your home loan,” she said.
“If you have an older home loan, there’s a good chance you’re paying more than you need to.”
She added that competition is fierce among the lenders and the odds are that banks are offering new customers lower rates than current customers.
Therefore, she said, all customers should call their lender and negotiate.
“If they won’t give you a better rate, take a walk to another lender and get a better deal. It’s easier than you think and you can save thousands of dollars a year.”