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An industry veteran says out-of-cycle interest rates combined with the broad spectrum of home loan products available has led to the most chaotic marketplace in Australian history.
1300HomeLoan managing director John Kolenda says the lending landscape has never been more unclear for borrowers, despite the Reserve Bank of Australia’s official interest rate remaining unchanged at 2.0 per cent for almost a year.
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“While there is a constant focus on the RBA’s monthly decisions, the home loan market has never been so chaotic,” Mr Kolenda said.
“Home owners have to tip toe through a mortgage minefield at the moment and it’s only expected to get even more confusing.
“Interest rates are being raised independently of the RBA’s deliberations while we also have a range of home loan products with some of the biggest price differentiators in memory.
“These product pricing differentials are across-owner occupied, investor and interest-only products. On top of that, lenders have different policies and loan to valuation ratios (LVRs) for the different products.”
Mr Kolenda said lenders have cited cost of funding issues and regulatory changes as the reason for out-of-cycle increases, including surges on investor loans by 12-47 basis points.
“We have also had the out-of-cycle raises on home loan rates in response to rising funding costs and the additional costs coming in for the extra compliance and regulatory increase on reserves that the banks will have to have in place by the end of June this year,” he said.
“Confused mortgage holders must be struggling to keep on top of all the changes. But they also can’t afford to adopt a set and forget mentality with their home loan as it could cost them thousands of dollars.”
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