Home loan consumers can still get better rates
The Reserve Bank of Australia (RBA) staying on the interest rate sidelines shouldn’t deter consumers from trying to secure a better deal from their lender, according to leading mortgage broker Loan Market.
Loan Market Corporate Spokesman Paul Smith said it was no surprise to see the RBA maintain its relaxed approach and keep the cash rate at 3.5 per cent for the second consecutive month.
Mr Smith said the RBA was likely to lower official rates at least once in the next few months, with some forecasters expecting the central bank to emerge from its winter hibernation in the spring and resume rate cuts.
He said the 75 basis points reduction in the cash rate over May and June had yet to have a substantial impact on consumer sentiment, particularly in the housing and retail sectors.
“The market is still adjusting to rate cuts in May/June and it appears the RBA would rather keep some ammunition up its sleeve to combat any further deterioration of the economy than try and stimulate the present lagging data sets,” he said.
Mr Smith said mortgage holders anxious for more rate relief should see if they can secure a reduction independently of any RBA decision.
“There are favourable conditions for certain borrowers who are looking for a better home loan, and it costs nothing to ask for a lower interest rate or to talk to another lender,” he said.
“There is still considerable downward pressure on rates as inflation is below its targeted range and the European debt crisis won’t be settled in the short term.”
As a result, Mr Smith said lenders would continue to apply competitive pricing to attract consumers and prevent any stalling in the credit sector.
“For consumers looking at home loans in the coming months, a mortgage broker is well placed to present the most competitive products that suit a borrower’s personal circumstances best,” he said.
Mr Smith said a mortgage broker who is independent from the banks can advise of products from a wide range of lenders or negotiate a better rate with their current institution.