What are the current residential mortgage rates and how to secure the best rates on the Sunshine Coast

What exactly is the RBA Cash Rate?

The RBA cash rate is Australia’s official interest rate. As of May 2023, it had increased to 3.85%. The Reserve Bank of Australia (RBA) has the power to influence the cash rate by altering the cash rate target. They do this by increasing or decreasing it, typically in increments of 0.25%.

The RBA sets a figure called the cash rate, which represents the interest that banks and lenders must pay when borrowing money. The RBA defines the cash rate as the “overnight money market interest rate” since banks regularly lend money to one another and conduct these transfers overnight.

The cash rate is the rate of interest that banks must pay to borrow money in these transactions. This rate is used as a benchmark for various financial products, including mortgage interest rates, savings account rates, term deposit rates, and the exchange rate.

The RBA meets every month, except in January, to determine the cash rate. When changes are made to the cash rate, they have a substantial impact on other parts of the economy and the cost of financial products.

In the past, a high RBA cash rate has resulted in higher interest rates on home loans, savings accounts, term deposits, car loans, personal loans, and so on. A low cash rate, on the other hand, generally results in lower interest rates on these financial products.

The current RBA cash rate is 3.85%.

How does the cash rate impact my home loan?

The cash rate is a significant factor that banks consider when setting their variable home loan interest rates. Any increases or decreases in the cash rate will usually affect mortgage holders.

However, banks also need to consider their operating costs, such as staff, branches, marketing, and interest paid out to savers, and may not pass on the full rate cut to their customers.

Nevertheless, even a small reduction in interest rates can result in a substantial decrease in borrowers’ monthly repayments, resulting in thousands of dollars saved over the loan’s life. Conversely, an increase in interest rates will result in higher repayments.

How does the cash rate affect property prices?

If you are considering buying a house on the Sunshine Coast (or anywhere in Australia), you likely understand how interest rates impact the amount you will ultimately pay. However, you may not fully comprehend the far-reaching consequences of a rise or fall in interest rates.

Interest rate changes can cause fluctuations in property values on the Sunshine Coast and across the country.

Lowering interest rates makes it more appealing to take out a mortgage, which is why cuts by the RBA are often followed by a surge in demand in the property market. This competition frequently results in a significant increase in property prices.

Conversely, higher interest rates have the opposite effect. As the cost of borrowing increases, fewer people are inclined to purchase a home. Those who are interested may have to consider more affordable properties. The decrease in demand leads to a reduction in property prices.

How to secure the best rates on the Sunshine Coast?

Here are some general tips to secure the best mortgage rates on the Sunshine Coast;

1. Compare lenders: Shop around and compare mortgage rates from different lenders. Consider both big banks and smaller lenders, and look beyond the interest rate to other terms, such as fees and features.
2. Improve credit score: A higher credit score usually results in lower mortgage rates. Ensure that your credit score is accurate and up to date.
3. Save for a larger deposit: as a prospective home buyer, the more you can save for a deposit, the lower the loan-to-value ratio (LVR) of your mortgage. A lower LVR can result in lower mortgage rates.
4. Consider a fixed-rate mortgage: A fixed-rate mortgage can provide certainty and protection against rising interest rates.
5. Seek expert advice: Consider seeking the advice of a qualified mortgage broker who can help you navigate the mortgage market and find the best deal for your situation.
6. Review your current mortgage: Like a doctor’s check up for your home loan. It is important to periodically review your mortgage to assess whether the home loan you have is still right for you.

Remember, securing the best mortgage rates is not just about the interest rate, but also about the terms and conditions that come with the mortgage.

How BrokerCo can help you secure a better rate on your mortgage

Our expert Sunshine Coast mortgage brokers can help you in a number of ways:

• Assess your current situation and calculate how you will be affected by rate increases, then offer solutions to improve your financial standing.
• Help you navigate the end of a fixed term by researching and presenting the best options for refinancing, reverting, or switching lenders.
• Assist you in refinancing your home loan to a lender that offers competitive interest rates, rather than staying loyal to your current lender if their loan is no longer suitable for your needs.
• Negotiate on your behalf with your lender to obtain a more favourable deal.
• Present you with options and help you determine whether a fixed or variable home loan is the best choice for you.
• Help you consolidate debts to make them more manageable.
• Utilise an offset to reduce the amount of interest you pay.

Refinancing your home loan can be a smart financial move that helps you save money and reduce your monthly repayments. By taking advantage of lower interest rates, accessing equity, and switching to a better lender, you can improve your financial situation and achieve your goals.

Give the team at BrokerCo a call  to secure the best home loan solution today!