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Mortgage-holders have been encouraged to “get on the front foot” and search for better deal ahead of the expiry of COVID relief assistance.
The managing director of mortgage aggregator Finsure, John Kolenda, has urged borrowers, particularly those on loan repayment holidays, to proactively hunt for a better deal, given that further cuts to the cash rate from the Reserve Bank of Australia (RBA) are unlikely.
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“We are still in a highly competitive lending market, and banks will offer a better deal if you are ready to resume repayments,” he said.
“There’s no point waiting for the RBA to cut official rates again. Do not be complacent about the interest rate you are currently paying as this can potentially cost you a lot of money.”
Mr Kolenda said mortgage-holders with a variable rate exceeding 3 per cent “need to take action”.
“According to the RBA, the average variable rate by owner-occupiers on new loans in June was 2.92 per cent,” he added.
“So, if you are still in the ‘3’ zone you should be asking your lender for a better deal, or engaging an experienced mortgage broker to ask on your behalf.”
The managing director claimed that banks would be open to negotiating a cheaper rate with customers, particularly deferral customers resuming home loan repayments.
“There are deals aplenty for new borrowers or for existing borrowers with a good credit score,” he said.
Mr Kolenda’s comments follow the RBA’s decision to keep the cash rate on hold at a record low of 0.25 per cent.
RBA governor Philip Lowe has repeatedly stressed that rates would remain unchanged for “some years to come”, with the COVID-19 crisis stifling progress towards the central bank’s employment and inflation targets.
The central bank governor also recently reiterated that a move to negative interest rates would be “extraordinarily unlikely”.
Reacting to the RBA’s decision, Mortgage Choice CEO Susan Mitchell said the interest rate environment, along with state and federal government incentives, would help support transaction activity, which has impacted by the economic fallout from the COVID-19 crisis.
“The low cash rate continues to drive historically low home loan interest rates. This, coupled with unprecedented levels of government support in the form of grants and incentives, creates opportunity for prospective buyers,” she said
“I would encourage Australians looking to buy their first home to speak to their local mortgage broker to understand how they can access the support available and to put their best foot forward when applying for a home loan.”
[Related: Brokers dominate FHLDS originations]
