Industry Update
Industry Update
Here’s our top 3 industry highlights that we thought would be of interest.
1. Interest rates & property prices
The RBA lifted cash rate for the 11th time this cycle to 3.85%, and we are already starting to see lenders increase their rates including Westpac, NAB, Auswide Bank and ME Bank to name a few.
Australian Financial Review Economic editor John Kehoe has put it down to “hot jobs, accelerating services inflation, rebounding house prices and weak labour productivity”.
AMP’s Deputy Chief Economist Diana Mousina said, “the next 12 months are likely to see easing inflation pressures, central banks moving to get off the brakes and economic growth weakening but stronger than feared”.
She added that “with an increasing supply shortfall, we have revised up our national average home price forecast for this year from a fall of -7% to around flat to up slightly ahead of 5% growth next year” .
Source- https://www.amp.com.au/insights-hub/blog/investing/weekly-market-update-12-05-2023
2. Cash Backs
Mortgage lenders have been offering cashback deals as incentives to attract new home loan customers. These deals typically range between $1,000 to $5,000 (or more).
We have found that the cashbacks have stimulated demand for people wanting to review their home loans (and refinance), but at the same time, borrowers may become what has been described as “serial cashback chasers” and using brokers to assist in the process.
This could result in pressure on brokers to recommend a product that is unsuitable for a client to “chase” a lower interest rate, and if a broker refinances an existing client’s loan(s) within 2 years, in most cases will result in a commission claw-back.
At Build & Protect, we always act in the best interest of our clients and will only refinance a loan if it’s in their best interests.
Both NAB and Commonwealth have announced that they will be discontinuing their cash backs after 30 June 2023, a decision welcomed by some in the industry.
3. Fixed Rate “Cliff”
More than 800,000 Australians have been reported to be on fixed rate loans that will end this year, and their rate is expected to go up by at least 3.85%.
We suggest that people with a fixed rate loan should begin their review process at least 6 weeks prior to when the fixed-term ends. This is because with more than 1,000 loan products available across the market, its likely that there is a better deal out there.
For your consideration.
Mike Bell EMBA, ADip FS I CEO and Finance Strategist
