According to the Reserve Bank of Australia (RBA), approximately 880,000 borrowers with cheap fixed-rate mortgages are facing a ‘mortgage cliff’ when their fixed-rate terms end this year.
Having avoided the 11 rate rises imposed over the past year through the RBA lifting its cash rate by 375 basis points to tackle rising inflation, these borrowers are likely to see their repayments double and potentially tough times ahead.
Ask yourself the questions – do you know how much extra you may have to pay each month? And where will you find the extra cash?
Brokers can play a big part in helping these customers through this hardship.
There are solutions available for people who may experience cash flow issues due to higher loan repayments, such as moving to an interest-only loan or consolidating debts.
Borrowers may also be able to get a better interest rate by refinancing with a different lender. A broker will work with the lender to help find a loan with a better solution for the borrower’s circumstances.
If a borrower is facing a ‘mortgage prison’ and is unable at this time to refinance to another lender, a broker can also negotiate a better deal. Banks are still looking to hold onto customers and will reward loyalty with a better rate.
It’s hoped most borrowers facing the mortgage cliff have been proactive well ahead of the end of their fixed rate term and engaging brokers and lenders to adjust to higher repayments before they are forced to move to a higher rate.
Get in touch today with us today to explore options and plan ahead.