What’s going on with rate hikes right now?

What’s going on with rate hikes right now?

It’s not just the big banks hiking up home loan rates in Australia right now. We’re now seeing a number of non-major lenders following suit.

But what does this mean for borrowers in Australia?

What did APRA say?

APRA Chief Wayne Byres recently announced that despite an influx of rate hikes in Australia, competition between lenders remains strong. Coming from the head of the Government regulator for banks, superannuation funds and insurance companies, this is certainly good news.

But why are more lenders increasing their rates? And why does APRA believe the market is still competitive regardless?

A skewed perspective

For one thing, media attention has been firmly focused on lenders who do increase rates, which creates a skewed perception of the market. These lenders tend to be larger in size, with more portfolios on their books. This makes it less risky for them to cover costs by increasing rates.

On the flipside, smaller lenders are now more competitive than ever. At Capita, we’re noticing that many ‘boutique’ lenders are now offering more affordable rates and better terms than their larger counterparts. This is why across the board; borrowers are not necessarily missing out.

If you’re looking for a home loan, now is still a good time to do so.

What if I’m with a major lender?

If your current loan is with a major lender, now is the time to check whether interest rate hikes have adversely affected you. Check online, or better yet, sit down with a mortgage broker and go over your options. Most brokers provide home loan services free of charge, as the lender you choose pays the broker a fee for handling the application process (this is something the lender would normally have to do). This fee is not added to your home loan or absorbed by you in any way.

And of course, there is no obligation to take any action, if you don’t feel it’s the right move for you.

We are finding that right now, many of our clients are benefiting from refinancing. If you’d like to know more, please talk to one of our brokers.