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Date Published : Thursday, February 14, 2008
A large number of Australian homeowners will bare the brunt of continuing interest rate rises when they come to renew their home loans later this year, according to an industry expert.
A least 15,000 homeowners signed up to three-year fixed mortgages in 2005 on an average rate of 6.83 per cent, Cannex has stated.
However, despite last week's decision by the Reserve Bank of Australia to increase rates by a quarter of a percentage point to seven per cent, the average variable rate home loan now charges around nine per cent.
As a result, those coming out of the three-year long home loanscould find themselves having to fork out a lot more than they have been doing for their mortgages.
Harry Senlitonga, a senior financial analyst at Cannex, told the Sydney Morning Herald that repayments on a loan of $250,000 will jump by about $370 a month if a borrower converts to a flexible loan following the latest rise.
Research body InfoChoice has warned that variable rate home loans could increase further during the year as the lenders attempt to make up the money lost in the recent global credit crunch.
Denis Orrock, the general manager of InfoChoice, told the publication: "The banks which increased their rates in early January all indicated the increases were nowhere near the actual increases they're seeing on their funding costs. So that indicated there was more to come."
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