Mortgage Choice, Best in the Mortgage & Finance Industry*, is thankful and happy to hear the Reserve Bank of Australia (RBA) decision to decrease the cash rate by 0.25% to 7.0%.
It is the first decrease since December 2001, when the rate hit 4.25%, and one that most consumers will no doubt welcome with open arms.
However there are two strong reasons why relieved borrowers should not let the long-awaited downward move go to their head or their budgets:
- Lending institutions may not follow the decrease
- It is only one decrease after almost seven years of slowly rising rates
Mortgage Choice National Corporate Affairs Manager, Warren O’Rourke said interest rates are still at a 12-year high so consumers should be conservative when celebrating.
“This year, for the first time in decades, we saw lenders move their mortgage interest rates independently of the cash rate cycle. So, in only a few months, some Australians have seen their mortgage rate increase by 1.1% rather than 0.5%,” he said.
“Unfortunately, we are uncertain as to whether lenders will follow the RBA to provide a little relief to Australian borrowers, many of whom are fairly tightly squeezed by their increasing mortgage repayments. Borrowers can take this official interest rate fall only as a hopeful indication that their financial commitments may soon be less daunting to meet.
“Regardless, rates remain at levels we haven’t seen since near the beginning of the 21st century. If mortgage repayments do end up decreasing, borrowers should not change their spending and budgeting habits unless it is absolutely necessary”.
About Mortgage Choice
Mortgage Choice is Australia’s leading mortgage broker, with a national network of hundreds of franchises and loan consultants supported by Group and State Offices. It provides professional home loan advice on, and choice of, products offered by an extensive panel of Australia’s leading lending institutions and its accredited loan/mortgage consultants do not charge customers for their services.
Mortgage Choice does not have its own products, and consultants are paid the same commission regardless of the lender or product chosen by the borrower*.
Mortgage Choice is a pure play distribution model with no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. The company listed on the Australian Stock Exchange in August 2004 (ASX sign: MOC).
Recent awards/recognition: 2008 MFAA Awards Best In Mortgage & Finance Industry; 2008, 2006 and 2005 MFAA Awards Retail Mortgage Broker of the Year; 2007 Lending Central Awards Mortgage Broker of the Year; 2007 FCA Excellence in Franchising Awards Franchisor of the Year (finalist); 2007, 2005 and 2004 Australian Banking & Finance Awards Best Mortgage Broker; 2006 BRW Magazine Top 500 Public Companies list; and 2005 Australian Mortgage Awards Best Branding and Most Effective Internet Presence.
5-Sep-2008