The peak body representing Australia’s finance brokers have advised mortgage holders to review all aspects of their mortgages as warnings become louder about major lenders lifting interest rates.
Peter White of the Finance Brokers Association of Australia (FBAA) says it is only a matter of time before the big banks lift their rates independent of the Reserve Bank of Australia (RBA) which has kept official cash rates steady at two per cent since May, 2015.
“The cost of compliance forcing banks to hold more capital, on top of increasing costs like IT infrastructure, inevitably will result in interest rate increases,” he said.
Mr White, a finance industry professional for more than 36 years, says borrowers should not feel comfortable just because the RBA continues to keep the official rate at historic lows.
“It could be 12 months before the RBA pulls the trigger, which will almost certainly be an increase, but just as we have seen recently with the Bank of Queensland, lenders will eventually lift their rate regardless, in order to keep shareholders happy.
He said finance brokers are ready to help customers and ensure that mortgage holders are still able to service their loans by making sure there is a margin on top of the agreed interest rate to account for any increase.
“My advice is for all borrowers to regularly consult with their broker or loan adviser to discuss the most suitable loan option for them moving forward during times of market uncertainty.”
“A broker is constantly assessing these conditions not just from day to day but from hour to hour. FBAA brokers have their finger on their pulse and are best placed to anticipate any movement.”