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Loan Market Group is tipping interest rates to rise dramatically in the coming months.
The mortgage broker’s executive director John Kolenda said the days of monthly interest rate movements of a quarter percentage point appear numbered following the momentous economic events of the past 18 months.
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According to Mr Kolenda, homeowners should anticipate rate movements of at least 0.50 per cent when the RBA decides to tighten monetary policy.
“When the RBA moves again they will probably do so decisively with increases from between 0.50 per cent and 1.0 per cent.
“It will be similar to when they started dramatically slashing the cash rate down from 7.0 per cent in September last year.”
Mr Kolenda said home owners should be budgeting for rates to rise again quickly when the economy turns around.
“While it is very tempting to be using the reduced home loan commitments now to boost the household’s spending power, people repaying home loans are better off paying as much as they possibly can in mortgage repayments,” Mr Kolenda said.
Mr Kolenda said most mortgage holders are on standard variable home loans with the major banks and more than 50 per cent of those consumers are paying an unnecessarily high interest rate.
“Most home owners should be able to do better than the standard variable rate and secure a mortgage rate that is anything from 0.70 per cent lower or more for large size loans,” he said.
