RBA Raises Interest Rates: How Will It Affect Your Mortgage?
Quick Summary
The recent Reserve Bank of Australia (RBA) interest rate hikes have resulted in a staggering reality for mortgage holders – borrowers now pay as much in interest payments as they paid to purchase their property. This means that a typical mortgage of $600,000 now costs $1.2 million over 25 years. However, there are ways to reduce your mortgage cost and find more affordable rates. Big banks typically disclose discounts on their headline rates, with the best deals available to those with at least 40% equity or less than 60% debt. On average, lenders offer 4.92% if you have 40% equity, 5% if you have 80%, and 5.73% if you have 90%. Speak to your current lender about getting a discount and use the market data to back up your request..
Full Story – $600,000: The latest RBA hike means your house cost has doubled
Mortgage interest rates have hit the tragic number, with borrowers now paying as much in interest as they paid to purchase their property.
In other words, house costs have doubled.
After nine official interest rate hikes, the Big Four banks are now advertising an average variable rate of 6.24 per cent, which is almost equal to that 6.36 per cent double-debt rate.
Read more from Nicole Pedersen-McKinnon:
This means that a typical $600,000 mortgage will now attract $600,000 in interest over a 25 year period.
That’s $1.2 million out-of-pocket all up.
But the good news is there is some tricks to secure a lower rate, bringing your ultimate home loan cost down.
The not-so-secret deals and discounts
The big banks now usually disclose on their websites at least a portion of the discounts that they apply to their headline rates.
Here, the more of your home that you own, the better. The cheapest deals are available to borrowers with 40 per cent equity or more, or in other words those with debt below 60 per cent.
In these ‘happy’ homes, the average big bank interest rate is 4.92 per cent, says Mozo.
It pushes up to a 5 per cent average if you still have borrowings of 80 per cent and 5.73 per cent at 90 per cent.
So, if you’ve paid off a good chunk of your property – and/or haven’t requested your rate to be cut in a while – pick up the phone to your existing lender and ask for a discount.
What’s your script?
The above figures write it for you.
“I know that the average discount…
