Low RBA cash rate lulls borrowers into a 'false sense of security'

Despite the RBA announcing it will continue to hold the cash rate at 0.10% and not hike until 2024, new research reveals interest rates are starting to climb.

Findings from Aussie - part of the Lendi Group - revealed that despite the cash rate staying at 0.10% since November 2020, more than 1,000 rate changes to home loans have taken effect.

There has recently been a strong uptick in lenders increasing their fixed rates, according to Aussie's research.

This comes after recent findings revealed a 'worrying' complacency amongst Australian mortgage holders towards refinancing, with 62% being aware of its benefits but 54% never refinancing before.

According to David Hyman, CEO of Lendi Group, remaining complacent will likely see millions of people lose their chance to 'future proof' their home loan before interest rates rise once again.

"It seems a majority of Australian mortgage holders have been gaining a false sense of security, every time the RBA cash rate stays steady – failing to realise lenders have no obligation to adhere to this when setting their rates," Mr Hyman said.

"All of the talk is about the cash rate not rising for some time to come, but in reality, the steadiness of the cash rate does not prevent lenders from increasing interest rates."

Refinancing hits record high but concerns prevail

Despite the Australian Bureau of Statistics (ABS) recently revealing that refinancing hit a record high of $17.2 billion, Mr Hyman said this only represents 7% of home loans being refinanced in the past year.

"This lack of action could cost Australians down the line, when they finally come to the realisisation that the low rates they once overlooked are no longer on offer," he said.

Mr Hyman said that history has shown interest rate don't stay low forever, and that mortgage holders should prepare for this before they find that they have 'missed the moment'.

"A home loan is not a short-term commitment - it's a long-term investment," Mr Hyman said.

"If you are unsure about the process or time poor, speak to an expert who can look at how your current rate compares to what’s on offer, and ultimately help you future proof your home loan by capitalising on the favourable rates that are in the market right now."

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