MoneyQuest’s May Cash Rate Update – What Does An Increase In Cash Rate Actually Mean?

What an interesting time it is in mortgages!

Interest rates are all anyone can talk about, with speculation swirling about when the Reserve Bank of Australia (RBA) Board will increase the cash rate.

Well, STOP PRESS! It has just happened.

That’s right, the RBA Board has just increased the cash rate for the first time since November 2010. It has been raised by 25 basis points and now sits at 0.35%.

So, what does this mean for borrowers?

Firstly, it is important to note that just because the cash rate has been raised by a certain amount, does not necessarily mean that lenders will increase their variable home loan rates by the same amount.

This cash rate hike will prompt lenders to review their variable home loan rates, however lenders are not required to move variable interest rates by the same number of percentage points as the changed cash rate. In fact, lenders are likely to increase their variable home loan rates by differing percentage points, based on a number of different factors.

So, when your particular lender announces changes to their variable home loan rates, that is your cue to make an appointment with your mortgage broker.

Your broker can then review the suitability of your current mortgage in relation to the rate change and your personal circumstances, and compare it to other products on the market. Your mortgage broker may be able to identify a more affordable or flexible option for you.

Change is certainly in the air, but there is no need to panic. Reach out to your local MoneyQuest mortgage broker for guidance during this time.

• SHARE