Home loan customers are being warned of more ‘out-of-cycle’ rate hikes

HOME loan customers are being warned they could be hit by further out-of-cycle rate hikes, adding more strain to household budgets.

HOME loan customers are being warned they could be hit by further out-of-cycle rate hikes, adding more strain to household budgets.

Customers at ANZ and Westpac have already increased their variable rate loans in recent weeks and the Commonwealth Bank will do the same, lifting rates by 0.15 percentage points on Thursday.

AMP Capital’s chief economist Dr Shane Oliver said the US central bank’s decision to last week hike rates for the third time in 2018 could impact Australian mortgage customers.

“If we continue to see interest rate hikes in the US that will put upwards pressure on global borrowing rates,” he said.

“It could result in more out-of-cycle moves.”

Homeowners could be hit by more rate rises, experts warn. Picture: iStock.

The US central bank increased its benchmark lending rate by 0.25 percentage points to 2.25 per cent.

New analysis from financial comparison website RateCity found the recent hikes by three of the Big Four banks — excluding National Australia Bank — will squeeze more than $300 a year from household pockets.

Their database shows there are variable rate deals as low as 3.44 per cent and customers are being urged to hunt for cheaper deals.

A borrower with a $300,000 mortgage on a standard variable rate with a big bank could save more than $96,000 on a 30-year loan by switching to the cheapest deal.

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BORROWERS SADDLED WITH HOME LOAN DEBT

Home Loan experts’ managing director Otto Dargan said all owner occupier customers paying principal and interest should have an interest rate under four per cent.

“If your rate is over 4 per cent then you should consider negotiating with your lender or refinancing,” he said.

“Interestingly fixed rates haven’t changed much so some people are choosing to refinance and fix to lock in a low rate for the future as well.”

Aussie Home Loans’ chief executive officer James Symond said now is the perfect time to pounce on competitive deals.

“The lenders in the Australia market are fighting for market share and there are great deals on offer,” he said.

The Reserve Bank of Australia board meets again on Tuesday and it’s expected they will keep the cash rate on hold at 1.5 per cent.

The cash rate has not moved since August 2016.

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TIPS FOR A BETTER INTEREST RATE

* Check what interest rate you are on.

* Do a search online to see what other deals are available.

* Phone your bank and ask for the home loan retention team.

* Ask for a better deal and explain other offers available.

* If they refuse to budge threaten to leave.

STANDARD VARIABLE RATES AT THE BIG BANKS

CBA: 5.37% (increases 0.15% on October 4)

ANZ: 5.36% (increased 0.16% on September 27)

Westpac: 5.38% (increased 0.14% on September 19)

National Australia Bank: 5.24% (unchanged)

Originally published as Home loan customers are being warned of more ‘out-of-cycle’ rate hikes