There are a lot of changes taking place in order to help banks make more money (not that they need to). And even though the RBA isn’t moving their interest rates, property interest rates are on the rise after the banks decided they’ll do so independently.
The first change to take place was announced last week by Westpac, and discussed by Nathan in his recent Facebook Live seen above. Westpac have stated that, as of the 19th of September 2018, their home loan interest rates will increase by 0.14% independently of the RBA.
What sort of changes do we expect to see in the future?
In short, we are expecting other banks to follow suit.
The APRA restrictions have caused all banks to bleed. To compensate for that loss, banks now must raise their rates to get back some of that money.
Depending on what their needs are, they will play around with their interest rates accordingly.
So what does this mean for Australians?
The cost of money is going up all around the world. However, in Australia it hasn’t. This will cause 2 things:
- The Australian dollar will suffer because of it, as all other countries around the world are rising their rates.
- We are also going to be facing some rate rises independently of the RBA.
What is the good news?
As much as this may seem to be a restrictive situation, many opportunities arise due to it.
Since the interest rates have changed, so will the policies and criteria for lending.
Not many people will be buying or investing in properties. This opens a lot of doors and opportunities for bargains to those who are looking to invest and start building a property portfolio.
Rent prices are very likely to increase, and if you already have a property investment portfolio, you will potentially earn more rental return.
Why shouldn’t we panic?
This is just a natural part of the cycle and it’s happening all around the world.
Here at Zinger Finance, we don’t focus on interest rates and, even though property interest rates are on the rise, we’re not concerned about them. We don’t even believe that they will increase dramatically anyway.
In our experience, we’ve found that banks will offer cheap rates just to get you in the door. But, we guarantee you, that these cheap rates come with a lot more terms and conditions that don’t necessarily complement your long-term goals.
Therefore, don’t settle for cheap loans, as quite often they won’t get you very far.
What to do next?
Senior Zinger Finance strategist, Graham Turnbull explains that there are solutions, regardless of your current position.
“If you are a experienced investor, focus on building your investment portfolio and make sure to stay away from the bank’s cheap marketing strategies.
If you’re not already an investor, there are heaps of varying interest rates floating out there that you may be able to strike a good deal out of.”
As we have said before, we don’t just focus on interest rates. There are many things to consider when choosing the right home loan for you and your situation.
If you are buying your own home, you would potentially look at a different loan structure to what you would look at if you were building an investment property portfolio.
Zinger Finance structures mortgages in a way that minimizes the impact of changes such as the increase of interest rates.
If you have any questions, our experienced team at Zinger Finance are more than happy to help.