Al-anwar Newspaper English news in Australia
A top Australian finance expert has urged Australians to refinance their homes if they are feeling the pressure of the RBA’s latest cash rate hike.
At 0.85 per cent, the official cash rate was lifted to its highest level since September 2019 on Tuesday, and marked the first back-to-back rate rise in 12 years. Prior to the announcement, experts believed the rise would be closer to 25 or 40 basis points.
Speaking to Channel Nine’s A Current Affair, Executive Chairman of mortgage broking business Yellow Brick Road Mark Bouris advised Aussies: “Get off your toosh and do something about it straight away”.
“You can’t be sitting back, complaining about interest rate rises if you can save effectively four rate rises just by refinancing,” he said, comparing the situation to the US, where mortgage payers refinance regularly.
“Americans refinance their loans every six months. They just don‘t stop. Australians are not lazy, but they get comfortable. I think Australians could save a fortune.
“There’s a huge swath of Australians who never bother to check their interest rate. They don’t know if they’re paying too much and they never actually refinance, so at the end of the day they’re paying way too much.”
“I was quite shocked – a 50 basis points increase is the biggest increase from the Reserve Bank we‘ve seen in 22 years, so this is a very big move from them,” Sarah Megginson, a money expert at Finder.com.au said.
According to data published by Finder.com.au, the average variable rate has moved from 2.5 per cent to three per cent, meaning the monthly repayments on a $600,000 mortgage will rise from $2370 to $2529.
The shift means the loan will cost an extra $57,203 over its lifetime, even without taking into account future rate rises.
“It comes at a really tough time for people,” Megginson continue.
“We‘ve had such a rush of bad news recently, we’ve had inflation rising, fuel prices going up, grocery prices are increasing, electricity prices are increasing and now we’re having to deal with this big hike to our mortgage repayments.”
Speaking to the ABC, BetaShares chief economist David Bassanese said the sharp jump was the RBA’s attempt to “inflict shock and awe on the economy”.
“No doubt with a view to eliminating any lingering complacency with regard to the inflation outlook,” he said.
“Indeed, today’s decision is a bolt from the blue and stands in marked contrast to the RBA’s recent soothing words with regard to the outlook.
“It is now acting out of clear alarm and is not frightened to show its alarm.”
In response to the new cash rate, Westpac became the first big four bank to pass on the rate increase in full, announcing a 0.50 per cent increase to its variable interest rates from June 21.
The remaining three major banks – Commonwealth Bank, ANZ and NAB – are expected to follow suit and pass on the rate rise in full.
RBA Governor Philip Lowe addressed the news on Tuesday, predicting that inflation was expected to increase further, before declining towards the preferred bracket of “2-3 per cent range next year”.
