We’ve just had the first cash rate meeting for the year, which resulted in the highly anticipated outcome of ‘no change’ to the cash rate, which remains at a historical low of two per cent.
While this provides some degree of market certainty, the fact that rates moved out of cycle last year serves as a chilling reminder that you can’t depend on the monthly cash rate meeting. It has a few of us asking ‘what the heck is going on?’ and it turns out, there’s a few key market movements that are worth being across.
Foreign markets adding to uncertainty
In our day to day lives we often unknowingly make things a little harder for ourselves than they need to be. However when it comes to the current state of our economy, don’t be too hard on yourself. One theory currently making the rounds is that the cooling of China’s economy – which some speculate will get to the worst state it’s been in for 25 years – is going to have global implications, including uncertainty in our domestic market.
The practical tip for mortgage owners is to just keep in the know with news on the Chinese market, and in particular any Reserve Bank of Australia commentary on the issue. If conditions get worse, there could be a significant slowdown in overseas investors from the area, which might just open up the market for us locals – and if that time comes, you’d better be ready.
Providers are focusing on the new and the pushy
For the majority of 2015 the Reserve Bank kept the cash rate completely still, but even so the banks took it upon themselves to hike rates to their customers. Interestingly, while many existing customers might be sitting on a fairly decent rate, providers are generally providing better deals to prospective new customers.
As an overview, some of the lowest variable rates and their providers on the market at the moment include:
1. Mortgage House: 3.69%
2. CUA: 3.99%
3. HSBC: 3.99%
After having a look at these products’ rates and their features, you may be a little distraught at the thought of comparing them against your own, but the good news is you could be up for a better deal.
If you approach your existing lender with the request to chat about a better rate or better features, it’s more likely they’ll want to oblige and keep you, rather than lose your business. It helps if you’ve been prompt with repayments, are always courteous in your approach and speak specifically to your provider’s retention team. Fingers crossed!
Like it or not, we might be on the way up
In many ways 2015 was a historic year – for some reasons better than others. One of the better reasons was historically low mortgage rates in our local market. One study of Australian economists in January 2016 showed that 34 per cent of experts expect a rate rise this year, while 52 per cent expect a rate rise in 2017. We’ve had a good run in terms of low rates, and it’s called a cycle for a reason.
The good news is there’s still time to lock in lower rates – or if you’re feeling skittish, a fixed rate to tide you over for the next few years.