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Competition is Slowly Returning to the Central Coast Mortgage Market

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The big 4 banks have been able to increase their domination of the Australian mortgage market thanks to the fall out from the Global Financial Crisis and the subsequent government guarantee

Most independent financial commentators believe that this is not a healthy situation and if allowed to continue would see the end of a competitive mortgage market in Australia.

As an example the recent round of Reserve Bank increases saw only one of the majors keep within the RBA increase, the others increased their rates by significantly more and one bank almost doubled it.

Fortunately, there are growing signs that competition is slowly returning to the market, with some of the smaller regional banks and some non bank lenders not passing on all of the RBA increase and some in the last few days have also reduced their three year fixed rate by up to 0.6%

The withdrawal of the government guarantee for the mortgage industry is an interesting situation and time will see if this will help to level the playing field for the smaller players

Some good news,  the RBA decision to hold off on the much forecast rate increase in February has to come as a relief  for all home loan borrowers, all to often in the past the RBA  has moved to increase rates too quickly, resulting in a halt to a fragile recovery and causing many families financial stress.

Many people are worried about interest rate rises and are now thinking about fixing their rates.  Right now there is a 1.5% differential between the average variable rates of around 6% compared to a typical 3 year fixed rate of 7.5%.

One scheme used by many of my clients is to make payments as if an interest rate of 7.5% applied, then if the variable rate does reach 7.5% they will already be comfortable with that rate, since they are already been paying it. This would also reduce the mortgage balance  and maybe generate some additional savings by way of a redraw account.

Peter Rogers
Broken Bay Lending Solutions
Ph 43431271
Mob 0427 911 748
peterrogers@hotkey.net.au
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