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With interest rates expected to continue to rise into the new year, the central bank could face some consequences, the chief executive has warned.
Rate Money CEO and co-founder Ryan Gair has commented that the Reserve Bank of Australia (RBA) has “overshot” interest rates and will face “some serious repercussions” throughout 2023.
Mr Gair explained that 40 per cent of fixed rates are coming off their fixed term, meaning borrowers will go from a 2 per cent to a 2.5 per cent home loan, and in some cases, a less than 2 per cent loan will increase to a 5 per cent interest rate, doubling repayments.
The CEO acknowledged that the next few years will put a strain on Australians due to various factors such as the housing supply crunch, rising interest rates and inflation, the rental crisis, and loan serviceability.
“It will all come to a grinding halt in July next year, the RBA will have to take stock and act, but it won’t be until later in 2023,” Mr Gair stated.
On inflation, Mr Gair added: “Inflation hit 7.9 per cent last month, but I believe it’s a deceptive figure, driven by the time of year.
“People are doing their Christmas shopping early and the cost of living is so high that even simple day-to-day things like petrol are driving inflation.”
Rate Money reaches $4 billion in home loan settlements
The home loan provider recently hit the milestone of $4 billion in loan settlements since its launch in 2019.
Reportedly, Rate Money has secured loans for over 4,000 self-employed and migrant Australians as well as helping them break into the property investing market.
Mr Gair commented on the milestone: “We’re extremely thrilled to have hit $4 billion in loan settlements in just three years, a milestone that gives us confidence our products are helping thousands of self-employed Australians to achieve their dream of home ownership.
“At Rate Money we believe self-employed people are the most reliable borrowers in the country, they’re hard workers who know how to make money, how to save, and how to scrimp in those tough times.
“They shouldn’t face tougher criteria because their financials are more complex and sometimes more unpredictable than a PAYG borrower.
“We trust them and our default rate of 0.5 per cent for over 60 days is proof of their ability to service a home loan.”
[RELATED: Rate Money welcomes new distribution manager]
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