Powered by MOMENTUM MEDIA
the adviser logo
Borrower

CEO encourages mortgage review following rate hikes

by James Mitchell5 minute read

Mortgage Choice CEO John Flavell says the new year is the ideal time for Australians to review their mortgage and make sure they are still in the best product for their needs.

While home loan interest rates continue to hover around all-time lows, over the last couple of months many of Australia’s lenders have lifted rates across their suite of home loan products.

To continue reading the rest of this article, create a free account
Already have an account? Sign in

Moving forward, Mr Flavell said further rate hikes were now more likely than not.

“Over the last couple of months, we have seen the United States’ Central Bank lift the Federal Funds rate by 25 basis points. In addition, funding costs have started to rise, which could encourage the Reserve Bank of Australia and, in turn, Australia’s lenders to lift rates,” he said.

Advertisement
Advertisement

“With this in mind, now really is the perfect time for borrowers to review their mortgage and make sure they are still in the right product for their needs.

“By reviewing their home loan, borrowers may find there is another product on the market that is better suited to their needs.”

Mr Flavell said borrowers had a wide variety of home loan options at their disposal, with lenders offering a range of competitive products.

“Depending on your needs, you may choose to select a fixed or variable rate home loan. Alternatively, you could choose a split rate mortgage – where part of your home loan is fixed and the other part is variable – thus providing you with the best of both worlds.”

According to Mr Flavell, there has been a significant increase in the proportion of borrowers opting for a fixed rate mortgage.

The latest national home loan approval data from Mortgage Choice found fixed rate home loans accounted for 22.04 per cent of all loans written in December, up from 19.51 per cent in November.

In addition to potentially securing a better-suited home loan, Mr Flavell said refinancing could potentially help borrowers secure a sharper rate and thus reduce their monthly mortgage repayments.

“A lower interest rate on your loan can help you to either pay off your mortgage faster or inject more money into your back pocket.

“Alternatively, you may choose to refinance in order to access the equity you have built up in your property and finance some home renovations.

“Finally, you may choose to refinance your home loan in order to consolidate any outstanding debts you may have, including credit card bills, personal loans or car loans.”

But while there are a number of benefits associated with refinancing, Mr Flavell said there is a number of factors all borrowers should consider before heading down this path.

“Refinancing can be an expensive process depending on the type of home loan you are currently in. As such, it is important to weigh up the costs associated with refinancing, including potential break fees, lenders mortgage insurance and borrowing costs, and make sure it is the right financial move for your needs.

“Before making any decisions, make sure you speak to your local mortgage broker.”

[Related: Flavell offers 5 financial resolutions for 2017]

CEO encourages mortgage review following rate hikes
default
TheAdviser logo
default

James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

Anja Pannek CEO PLAN

Anja Pannek named MFAA CEO

The board of the Mortgage & Finance Association of Australia (MFAA) has confirmed that Anja Pannek will be the...

READ MORE
mike felton mfaa ta jdayl5

Aggregator heads reflect on Mike Felton’s legacy

Following on the news that Mike Felton is to retire next month and step down as chief executive of the Mortgage &...

READ MORE
melanie kiely afg ta mzh8zm

AFG non-executive director steps down from board

Australian Finance Group Ltd (AFG) has advised that Melanie Kiely will be stepping down from the AFG board to...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more