Homeowners have already experienced a rollercoaster ride in the property market during the pandemic and may experience another this year.
According to a news release, by the end of the year, one-fifth of mortgage holders who took out a home loan during extraordinarily low-interest rates will have their fixed rates rolled over. It is estimated that this could add hundreds and possibly thousands of dollars to the monthly repayments for these homeowners. (source: news.com.au)
Most loans obtained during that time had interest rates ranging from 1.75 to 2.25 per cent. When the fixed-rate period ends, many households will significantly increase their mortgage repayments as variable rates are typically higher than fixed rates.
This could also significantly impact a struggling household budget and put a further financial strain on many Australians.
The Reserve Bank's decision to control inflation came as an unwanted surprise to many Australians when their fixed-rate loans came to an end.
The inflation rate reached 7.8% in December 2022 and according to ANZ senior economist Catherine Birch, this increase has guaranteed future additions which are likely to be 25 basis points in both February and March.
These price hikes will have a significant impact because fixed-rate borrowers can anticipate a rate increase of more than 100% from roughly 5% to 6%. As a result, homeowners with sizable mortgages may see a significant rise in their monthly payments.
Finance Minister Katy Gallagher has advised caution since she is fully aware of the possible effects this could have on individuals and businesses. She said that 2023 would be a difficult year for the government to control inflation and advised debtors to look at refinancing options to lessen their exposure to rising rates.
It might be harder to apply for a loan, and the interest rates might be more than anticipated as this might significantly affect someone's decision to buy a house or other important assets.
The economy will ultimately be affected by this since fewer people will be eligible for loans or will have to make do with less money due to higher interest rates.
Aussies must exercise caution if they want to manage their mortgage payments and stay on top of this financial strain. Consumers must also remember that with the right advice and some little preparation, they can protect themselves from higher payments when their fixed rate expires.
We at UFS Mortgage Brokers are aware of the stress that escalating mortgage rates can cause. Because of this, our knowledgeable staff is ready to assist you in sorting through your loan alternatives and selecting the right one for you.
We can offer you a loan that won't break the bank because we have access to some of Australia's top lenders. All along the process, our brokers will keep you updated and address any questions you may have.
So don't let rising mortgage rates get in your way - take back control of your finances with UFS Mortgage Brokers! Call us today to learn more about our loan options.