The month of June has arrived, and with it, the onslaught of fixed-rate loan expiries.
These expirations will see borrowers convert from ultra cheap fixed rates of around 2% to variable rates of around 6%, thereby adding thousands of dollars a year in repayments on a typical mortgage.
That’s right… many borrowers will see their repayments effectively triple overnight!
According to the Reserve Bank of Australia (RBA), around one-third of outstanding housing credit is for fixed-rate loans and approximately half of that – estimated to be around $350 billion over roughly 900,000 loans – is rolling off this year. The vast majority of fixed-rate loans is expiring between June to September 2023.
If that wasn’t enough, many of these borrowers could find themselves becoming ‘mortgage prisoners’ – unable to refinance to a lower rate because they can’t pass a bank serviceability assessment, which tests a person’s ability to cope with a further 3% rise in interest rates.
It means hundreds of thousands of households could be stuck with their existing lender and unable to benefit from strong competition in the refinancing market – where lenders are offering discounted interest rates and as much as $5,000 in cashbacks. [more on cashbacks later!]
In response, some lenders have begun looking at their credit policies to determine what can be done. Having realised many borrowers may not be able to pass the 3% serviceability buffer, one bank has introduced a ‘streamlined refinance’ model that drops the buffer for eligible customers who have a proven track record of servicing their existing loan commitments. Other lenders are set to follow suit – watch this space!
It’s the beginning of the end for home loan cashbacks, with a number of high-profile banks announcing they’re withdrawing their cashback offers for new refinancing customers by June 30.
The list of lenders no longer offering cashbacks is growing and now includes CBA, NAB, Westpac, Bankwest, ING and Suncorp. ANZ is the only big four bank that has not announced it will scrap its cashback deal.
There are still over 20 lenders offering cashback deals, however, although this number is likely to drop significantly in the next few months.
If you are one of the many borrowers coming off of a cheap fixed rate, or if you just haven’t reviewed your home loan in the last two years, now is the perfect time to take advantage of the current opportunities before they disappear!
>> Simply request your FREE Finance Review, email email@example.com, or call 08 8451 1500 with the details of your current home, investment and other loans.
We’ll assess your situation and tell you whether you can save a significant amount of money by repricing, refinancing and/or rejigging your loans.
You have nothing to lose and everything to gain – so do yourself a favour, and let us help you get a better deal on your loans!
Sam, Matt & Team
PS. Right now you can still get up to $5,000 cash back by refinancing to a new lender!
PPS. Don’t wait! Get on the front foot now – click here or call 08 8451 1500 to schedule in your complimentary finance review.