If you’re at risk of negative equity or being turned down when your mortgage ends, it may be worth refinancing now.
Fixed rate borrowers whose terms are ending within the next 12 months have been urged to assess whether they will be able to refinance at the end of their term or be better off renegotiating their loan today.
RateCity analysis finds an average buyer who bought a house in Sydney in July 2021 for $1.3 million with a 20 per cent deposit would have 17 per cent in equity today, with the median price having fallen to $1.2 million. But if the median price falls to $1.1 million in December this year, as per ANZ’s forecasts, they’d have only 11 per cent. The same buyer in Melbourne, purchasing in July 2021 for $957,000, would have 17 per cent equity today, and 12 per cent by December.
Those who owe less than 80 per cent, but are brushing up against that threshold, should ask whether they’d be better off breaking their fixed term early to access the current fixed rates before projected RBA increases push rates higher, or property price falls nudge borrowers into that equity danger zone.“Owning less than 20 per cent of your property isn’t an automatic sentence to mortgage prison. It just means your new bank might charge you lenders’ mortgage insurance,” says Tindall.
But if the Reserve Bank of Australia were to raise interest rates another three times, that borrower could expect this variable rate to reach 6.29 per cent by the time their fixed loan ends. But by locking in that 5.59 per cent fixed rate now, rather than potentially 6.29 per cent in June, they’d be paying 0.7 per cent less in interest, and saving $5250 per year.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Rate rises slash borrowing capacity by 30pcThe 10 consecutive interest rate increases have lifted mortgage repayments by 50 per cent since April last year and added more than $1000 a month on an average mortgage according to Canstar.
Read more »
Mark Bouris' generous mortgage relief offerAs households suffer as a result of the ten successive cash rate hikes, one company is giving away $60,000 to assist five lucky Australians with their mortgage repayments.
Read more »
'One line of code' could have fixed Uber's surge pricing after Sydney train chaosStranded Sydneysiders were left fuming after Uber's fares skyrocketed on Wednesday due to the company's algorithms around price surging. AI experts say the same algorithms can also prevent this from happening.
Read more »
Australia could ditch Collins subs upgrade in favour of AUKUS alternativeThe Federal Government is weighing up alternatives to its plans of upgrading the current Collins-class submarines after revelations its cost could blow out to $10 billion.
Read more »
Money guru’s shock cash offer to struggling homeowners - realestate.com.auFed-up finance guru Mark Bouris is offering to help struggling homeowners meet their skyrocketing loan repayments with a cash injection.
Read more »