The national peak body representing Australia’s finance brokers has welcomed the current interest rate pricing war but has warned consumers not to be “caught up in the moment” and make decisions they will regret.
The Finance Brokers Association of Australia (FBAA) says the interest rate reductions create the perfect opportunity for mortgage holders to undertake a proper review of their current loan to see if they can reduce their repayments.
However FBAA chief executive officer Peter White said “not every cheap loan will be good for you”.
He urged mortgage holders to consider their individual circumstances when thinking about fixing for years.
“If you are considering having a family, renovating the family home, moving house, changing jobs or retiring, these are factors that should be considered when locking yourself into longer term contracts, which these lower rates require.”
Mr White said consumers should make “an informed decision, not an emotional one.”
He said now is the perfect time for people to review their mortgages, but cautioned against doing this with a bank.
“I’d recommend every mortgage holder review their loan now to see if they can get a better deal, as there are some great rates around; but a proper review can’t be done objectively by a bank.
“A bank can only offer you their products, which limits your options and does not guarantee you the best deal,” he explained.
He said a finance broker will conduct a “legitimate review” that looks at the borrower’s needs.
“The National Consumer Credit Protection Act stipulates that a needs analysis must be undertaken by whoever is arranging the loan, and a broker will do this while also having access to a wide range of rates, ensuring you know your options.”
Mr White said consumers should seek out a broker who is a member of a professional association like the FBAA, “to ensure they are best protected”.