‘Tis the season for a mortgage makeover, but tough outlook for households in 2016
- All 33 experts in finder.com.au Reserve Bank Survey correctly predicted no change to cash rate
- 58% of experts forecast property prices to rise in 2016; 45% say rent will increase
- Borrowers encouraged to review their mortgage this holiday season
December 1, 2015, Sydney, Australia – There was no surprise outcome from the Reserve Bank meeting this afternoon, with the cash rate holding at 2 percent, as predicted by the 33 leading experts and economists in the finder.com.au Reserve Bank Survey (finder.com.au/rba-cash-rate), according to one of Australia’s biggest comparison websites, finder.com.au. Most of the panel cited an improving economy as the likely factor behind the decision.
HIA were the most consistent forecasters for 2015, with a 100 percent success rate across 10 months of predictions (it was absent from the February Survey). Ten institutions had nine correct predictions across the year: Bank of Sydney, BTFG, Moody’s Analytics, MyState Bank, NAB, onthehouse.com.au, Property Observer, QIC, St. George Bank, and Westpac.
Interestingly, the most inaccurate month was February, when only two economists predicted the RBA rate drop, a success rate of 7 percent. These were RAMS and Westpac.
For next year, five of the 33 experts (15 percent) in the latest Survey are tipping a rate drop in February, at the first meeting of 2016.
Bessie Hassan, Consumer Advocate at finder.com.au, says there’s a tougher year ahead for borrowers and lenders, alike.
“It’s going to be tougher for households next year and it’s not just borrowers who can expect higher costs, but also renters. Fifty-eight percent are predicting property prices to rise in 2016, despite 38 percent tipping a decrease in demand for residential property in the next 12 months.
“Almost half of the experts (45 percent) say rents will also increase in 2016, while 42 percent expect rents to remain the same and 13 percent believe rents will fall.”
In the meantime, borrowers are being encouraged to take matters into their own hands by using the holiday season to give their mortgage a makeover, she says.
“With work winding down, Christmas just a few weeks away, and recent rate hikes coming into effect, now is the perfect time to pull out your paperwork and find out whether your mortgage is actually serving your needs anymore. Check your current interest rate, the features of your loan, and jump online to compare what other similar products are out there – chances are you may just find a better deal.
“It’s not uncommon for banks to discount within the vicinity of 1-1.25 percentage points or more off their standard variable rate for new loans, and generally, the larger your mortgage the greater your bargaining power.
“If you can’t or would prefer not to switch lenders, you’ll need to demand a better offer from your current lender – speak to the customer retention department of your bank and tell them you’re not happy with your current deal. If they want to keep you, they’ll have to do better.
“For an average mortgage – currently $379,400 – a 0.10 percent discount could lead to a saving of $281 over 12 months and $8,424 over the life of your loan. This is based on the current average variable home loan rate of 5.22 percent in the finder.com.au home loans database (finder.com.au/home-loans).”
The Survey also found that the majority of experts (58 percent) are expecting the cash rate to rise beyond 2016, so borrowers should consider putting a longer term plan in place where they can use this time to make extra repayments and minimise higher costs down the track.
“There’s nothing to lose, and plenty to gain from giving your finances a health check – do it sooner rather than later to make the most of a competitive home loan market and to start saving some serious dollars.”
For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
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