Sally Tindall from Rate City explains how to save money on your mortgage even as interest rates rise.
Following yesterday’s cash rate increase by the Reserve bank Of Australia, RBA, which was the eight straight rate hike and now sees the cash rate at a ten year high of 3.1%, it could be a less than merry Christmas for many Australians who are struggling with their mortgage payments.
With the latest increase from 2.85% to 3.1% this equates to an increase of $75/month on a $500, 000 mortgage. Since May we have had eight consecutive rate hikes.
In April the rate was 0.1%, in May 0.35%. June saw the rate increase to 0.85% while the hike in July saw the rate at 1.35%. August saw the rate move to 1.85%, while September was an increase to 2.35%, October a lift to 2.6%.
In November the cash rate went to 2.85% and now in December we are seeing 3.1%.
Again using a $500, 000 loan as an example overall there has been an increase in monthly payments of about $835.
It is widely expected that there are still more rate increases to come. Although the major banks have been quick to pass on yesterday’s rate increase to borrowers, there has been no commentary from most of the big four banks about increasing interest rates for savers. The exception here is CBA who have passed on the increased rates to savers via their saving accounts.
ANZ and Westpac are predicting 3 more rate hikes to come in the new year.
Those Australians who are struggling with their repayments have the option of looking at refinancing their mortgages and should speak with a good lender or broker such as John Morton manager, mobile lending at Bank of Queensland (Ph: 73212 3333) to explore their options.
