In a widely anticipated move, the Reserve Bank raised the cash rate to 4.60% yesterday.
What does this mean for you?
I am currently working through every client loan, reviewing your rate and discount, and I will contact you personally in the coming days and weeks if I need your assistance in negotiating a better rate for you.
And if you have friends or family looking at their home loan and wondering whether they are still getting a fair deal, I welcome the opportunity to help them too.
As always, all you really need from me is:
• how to plan
• what you should do
• what I will do
Some theory
In Australia and the US, something called the 3-year government bond rate has moved over 5% in the last few months. It’s what investors are demanding to fund government debt. Remember, in Australia Commonwealth Government debt has just gone past $1 trillion.
Banks can buy money (if they choose) at the 3-year bond rate and lend it, with a margin, into the 3-year fixed rate.
Historically, the 3-year fixed rate tells us where the variable interest rate is predicted to be in the medium term.
Right now, 3-year fixed rates available to consumers are between 6.80% and 7.10%, with many subtle levers and provisos.
After yesterday’s Reserve Bank move, typical home loan rates will be between 6.30% and 6.60% to consumers, again with many subtleties.
What this means is that there is at least one more Reserve Bank interest rate rise ahead with a fair degree of certainty.
There will be a lot of talk and opinion. Mostly noise. You can read or ignore it according to your degree of interest and involvement.
My only job is to help and advise you.
How to plan
I have just adjusted the “reasonable worst-case scenario” rate in my loan calculator to 6.75%. To plan, follow this link, put in your home loan details and set a budget.
What should you do?
Sit still, plan your budget and talk to me about your specific circumstances. It’s what I’m here for. I am an informed voice of calm and help.
What will I do?
I am working through every client loan at the moment, reviewing the rate and discount and contacting you personally in the coming days and weeks if I need your assistance in negotiating a better rate for you.
As you know, I seek out lenders who have a proven record over time of treating you fairly.
And if you have friends or family who do not get this service from their bank or broker, I will welcome being able to assist them just as I assist and support you.
As always – Call or email me anytime
Alan Heath
Brisbane’s Trusted Mortgage Broker