December 12, 2016
If you have been following the interest rates on home loans or watching the news, then you may be aware that some banks have already started raising them. Because some banks have already increased the rates, it is quite likely that other banks will follow.
The interesting thing about this rate increase is that the main bank, the Reserve Bank of Australia (RBA), has not increased its rates at all. This is entirely something that the banks themselves have decided to do.
Of course, there are those people who are screaming that greed is behind the move on the banks’ part. After all, are they not already making billions of dollars of profit each year on home loans? Others are simply calling it a normal out of cycle move that banks do every now and then.
With the recent election win in the United States by Donald Trump, the markets around the world have already been affected in a positive way. This is in spite of the fact that Trump has not even taken office yet. With his promises of rather large projects, it has already given confidence to many people that massive projects will be set in motion, creating a potentially much stronger economy.
In the United States, bonds are often used to set the market price. This price often serves as a worldwide benchmark, and since the election, the bond price has increased in value from 1.8 percent to 2.35 percent. In response to this increased value, the UK has already increased its rates, too.
Westpac has made the first move to increase its rates on home loans. While it has not raised rates on all its loans yet, their fixed rate loans of two, three and five years have been raised. Some of the subsidiary Westpac banks have also raised their rates on the same type of loans. The rates for the variable rate loans have not been increased yet.
Other banks have also raised some of their rates. The UBank has raised its rates for new loans and their current customers by 10 basis points. The ME Bank has raised its variable rates for all of its new customers.
It is also believed that the RBA has completed its cuts. Some are saying that Aussies may expect the rates to be raised by as much as one percent within the next 12 to 18 months.
Martin North of Digital Finance Analytics says that Australians should expect rates to increase across the board. The increase would likely be between half to three-quarters of a percent, and that it would not depend on any move by the Reserve Bank.
When asked for an explanation about why the Westpac Group raised its rates, a spokeswoman said that several factors were involved in the decision. They included the costs of funding loans, the long-term outlook for the interest rates, risks involved, and various regulatory issues. In spite of that, they still claim to be “competitive.”
If you have wanted to refinance for some time but have not done so yet, now is the time to do it. If you wait, the best rates will be gone, and you will have to settle for a higher one.
This means that Australians have a limited amount of time to get the best rates. Banks that have not yet raised their rates are becoming fewer. Soon they will all have done so. This means that now is the time to apply for a new home loan or refinance. Be sure to look around and discover which banks have not yet raised their rates. When you apply, be sure to lock in your rate so that you are not cheated out of the rate you want.
Written by Refinancing.com.au
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