More than half of Australians (57.5%) planning to buy property in the next two years said that they were “very concerned” or “somewhat concerned” about lenders changing their interest rates independent of what the reserve bank decides, according to a First Home Buyer Survey by Mortgage Choice.
Thirteen lenders, including Westpac, CBA, NAB, and ANZ, lifted their rates on November 20.
“In October, we saw the big four banks raise their variable rates independently of the RBA by an average of 18 basis points, which clearly concerned first time buyers,” said John Flavell, chief executive officer for Mortgage Choice.
“To put these rate increases into a dollar figure, an 18 basis point rate increase would see a home owner’s monthly mortgage repayments climb by more than $45* on a $400,000 mortgage with an interest rate of 5.43%.”
Despite the rate hikes, Flavell noted that home loan rates remain at 50-year lows.
“Now is still a great time to be a first home buyer as there are plenty of incredibly competitive, sharply priced products they can choose from,” he maintained.
The survey also found that one in five prospective first time buyers did not even know that banks could or would change rates out-of-cycle.
“When you consider that 18.3% of first time buyers didn’t know the banks could move rates independently of the Reserve Bank, it is clear there is more work to be done to help improve the financial literacy of Australians.
Flavell pointed out that purchasing property is one of the biggest financial commitments an individual can make, so those planning to buy their first home should first understand what they are getting themselves into before closing a deal.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan