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Mortgage holders face more confusion with banks imposing increases to some home loan interest rate products while official interest rates remain on hold, says broker network 1300HomeLoan.
The group’s managing director John Kolenda said it was no surprise to see the RBA leave its cash rate at a record low of 1.5 per cent at its final board meeting for 2016.
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Mr Kolenda said that while the RBA’s cash rate is unlikely to change in the short term, it appears fixed-rates have bottomed out and some variable rates have also increased as banks respond to cost of funding challenges.
“Rates are moving outside any decisions being made by the RBA as lenders are exposed to global markets and cost of funds,” he said.
“In the future we will likely see more varied pricing across different products and risk categories. Products like investor loans, higher loan-to-valuations ratios (LVR) and interest only loans will see higher interest rates versus the traditional home loans under 80 per cent LVR.”
Mr Kolenda said there will also be “greater confusion for customers” and that means a greater need to use a mortgage broker as rate movements across different products will see large variations across lenders.
“Finding the right product at the right price will be very challenging,” he said.
Mr Kolenda said banks will be treading carefully with any out-of-cycle rate rises given the strong government and opposition scrutiny they are under.
“But equally they will have no alternatives but to raise rates due to increased funding costs, as evidenced over the last few weeks,” he said.
