Last updated on 24th October 2018

Rate Watch 2018: Three Of The Big Four Banks Push Interest Rate Hike To Customers

After years of historic lows, interest rate rises are set to add thousands to Aussie mortgages. This is how to protect your loan.

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First, it was Westpac, now ANZ and CBA have followed through with an out-of-cycle interest rate hike that’s set to add hundreds a year to Aussie mortgage repayments*. Typically a rate rise only occurs when the Reserve Bank raises the cash rate, but this time three of the Big Four banks are acting first, passing on a rise in operational costs directly to their customers.

It’s no secret that many Australians are struggling with the rising cost of living, and with over 80% of our mortgages resting with the big 4 banks and their subsidiaries, this rise is set to affect a large proportion of the population. It’s a bitter pill to swallow when these same banks are continually posting multi-billion dollar profits.

It begs the question, why aren’t the banks afraid of losing customers because of this decision? Well, despite there being better deals out there, they know that the majority of people will do nothing and simply absorb the cost. Simply because, when it comes to banking, most customers ‘stick’.

But if you’ve built up enough equity in your home, you have the ability to refinance your loan with a lower interest rate, or to fix the rate for all or part of your loan, potentially saving yourself thousands of dollars. Not only will you find banks offering lower rates to new customers, smaller lenders are also offering attractive rates, bonus features and no-ongoing fees to attract frustrated switchers.

Our free service can help you take advantage of the deals you wouldn’t otherwise know about. You can start by comparing rates from trusted lenders across Australia, and if you find a better deal you’ll get access to personalised advice from an experienced broker who can negotiate for better loan terms on your behalf.

Here’s How You Do It:

Step 1: Select your State below.
Step 2: After answering a few questions, you will have the opportunity to compare competitive rates and could be eligible for significant savings.

To put these rises into real terms, this latest rate rise will add around $10,000 to a $300,000 mortgage over the life of a 30-year loan*. While it may not seem like that much, an extra $10,000 on top of a loan most people already struggle to repay can end up making a huge difference.

Even if you’re able to absorb the extra cost, this out-of-cycle rise is the perfect reminder that you should be reviewing your mortgage regularly, and switching to a loan that serves you better when you’re able.

The difference even just a low rate can have on your bottom line is staggering. For example, on a $500,000 loan, the difference between paying a rate of 4.5% and paying 4% works out to a staggering $41,996.77 over the life of a standard 30-year loan. That could work out to be a lot of extra cash for you to spend or reinvest.

At Home Loans Australia our team of experienced brokers can walk you through each step to help you save. Finding a better deal on your mortgage doesn’t need to be complicated, and each month, we’re helping more and more people take advantage of the savings that are waiting to be discovered.

If switching was easy, it wouldn’t make any sense to simply stay with a big bank and keep paying more than you need to. Well, our brokers make switching that easy, assisting with paperwork and guiding you through the process so that you’re informed and in complete control throughout the process.

For most mortgage holders, there are better deals out there, and with a rate rise sweeping through the big banks, there’s never been a more important time to compare rates and see if you could save.

*Increase in costs over the life of a 30-year loan of $300,000:
Westpac flexi first current rate 4.59% current repayment $1,537 (0.14% rate rise) new rate 4.73% new repayment $1,561. Extra cost to customer $9,067 (over life of loan)
ANZ simplicity plus bank current rate 3.65% current repayment $1,373 (0.16% rate rise) new rate 3.81% new repayment $1,399. Extra cost to customer $9,792 (over life of loan)
CBA bank Extra variable) current rate 3.99% current repayment $1,431 (0.15% rate rise) new rate 4.14% new repayment $1,456. Extra cost to customer $9,377 (over life of loan)

This article is opinion only and should not be taken as financial advice. Check with a financial professional before making any decisions.