FOLLOWING the Melbourne Cup cash-rate decision that saw the Reserve Bank of Australia (RBA) hold the rate steady at 3.25 per cent, borrowers are encouraged not to lose sight of the positive signs in the home-loan market.
While consumers are struggling to gain confidence, there is encouraging economic data that shows Australia is experiencing high levels of housing affordability.
According to QBE's latest Australian Housing Outlook report, the proportion of household income put towards mortgage repayments has fallen in NSW.
In fact, apart from a time in 2009 when the RBA cut interest rates aggressively in response to the global financial crisis, we are looking at the best levels of affordability in the state since the first half of last decade.
Despite some positive signals in the market, consumer confidence is still worryingly low and the decision to keep rates steady is unlikely to help this improve overnight.
While it is understandable that the rising cost of living is having an impact on consumer sentiment, when looking at the pace of economic recovery, it is important to take in the whole race, not just the finish line.
A rate cut this month would have been a win for borrowers but there are other ways to improve your financial outlook and to repay your mortgage sooner.
Although the RBA's cash rate decisions offer a good indication of where interest rates are headed, what really impacts a borrower's hip pocket is the rate charged by their lender.
Keep in mind that lenders' interest rates are also based on a multitude of other factors, such as their funding costs, competition for retail deposits, whether or not the customer is new or existing and the size of the loan.
With rates being held steady, borrowers should take this opportunity to get a home-loan health check by asking your mortgage broker whether savings can be made on your home loan, or even whether there is a better-priced product on the market for you.
Sometimes, if you have a larger loan amount and/or have other accounts or debt commitments with a lender, they might consider giving you an interest-rate discount.
But it is worthwhile to consider the pros and cons of staying with your existing lender, as opposed to shopping around.
It may be cheaper to keep your existing loan, rather than pay new loan costs such as application fees, lenders' mortgage insurance, registration fees, account fees, discharge fees, etc.
For more information, phone Richard Windeyer on 1800 01 LOAN.