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While the prospect of rising interest rates is of concern to consumers, brokers are confident that a change in the rate cycle will not be bad for business.
Mortgage Detective and Tiffen & Co director Gerard Tiffen told Mortgage Business that the Canberra market had been booming in recent months and a rate rise would help take some of the heat out of the market.
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“From a consumer’s point of view, raising rates is not a good thing. However, from my perspective as a broker, a rise in the official cash rate might help slow things up a bit,” he said.
Rates are expected to rise within the next six months if the economy continues to show signs of recovery.
According to Mortgage Business’ latest straw poll, 42.6 per cent of respondents believe the official cash rate will increase before the end of the year.
Of the 540 respondents, 52 per cent said rates would stay the same while only 5.4 per cent said they would decrease in the last few months of the year.
Custom Equity Group managing director Sean O’Brien said an increase in the variable cash rate would reduce the amount of broker directed enquiries.
“In my opinion, the Reserve Bank won’t increase the cash rate before the end of the year. However if they do, it may result in less enquiries to brokers – nothing that would raise alarm because there are always more opportunities around the corner,” Mr O’Brien said.
According to Mr O’Brien the ongoing threat of rising interest rates has forced consumers to think about fixing their mortgages.
“I believe the horse has already bolted with regards to fixed rates. The time to lock in has passed,” he said.
“In some instances lenders have increased their rates by 1 percentage point over the last month and they are going to continue to raise their rates while ever ‘funding costs’ increase.”
RBA governor Glenn Stevens last week warned home buyers to be prepared for interest rates to rise as much as 2 to 3 percentage points from current levels as economic conditions return to normal.
