Finance gurus blunt advice amid interest rate hikes | A Current Affair

Subscribe here: | Following the announcement by the Reserve Bank of Australia that interest rates will rise to 0.85 per cent, financial guru Mark Bouris is encouraging Aussies to “get off your toosh” and look into refinancing. (Broadcast June 7, 2022)

Households across the country have just been hit with the single biggest interest rate hike in more than two decades if you have a mortgage that means you’re about to be slugged thousands of dollars more a year in repayments but while the height to your home loan is out of control there is something you can do that could save you a fortune it’s always been the

Great australian dream but today it feels more out of reach than ever before it is getting harder and harder huge rise rates to lift by half a percent the reserve bank desperate to quash inflation it’s an aggressive move the reserve bank announcing it’s lifting the cash rate from 0.35 to a whopping 0.85 the second hike in as many months i was quite shocked a

50 basis point increase is the biggest increase we’ve seen from the reserve bank in 22 years so this is a very big move from them it makes me feel very anxious the rising interest rates yeah i think about it a lot actually i am a bit nervous because you know every time they spike you have to replan your budget we knew another hit was coming but not one this big

Home loans expert sarah meganson from this could be a strategic move by the reserve bank to go really hard now and then they’ll take a softer approach throughout the rest of the year uh but we really don’t know another one what about on the next page courtney david and little caden shaw are one of millions of aussie families sweating on today’s

Cash rate announcement groceries petrol yeah it’s just getting crazy and to add interest rate hikes on top of that they were enjoying the low interest rates after buying their langlang home in melbourne’s southeastern suburbs in january working in real estate herself courtney had the mortgage well thought out over the years we’ve had to be very tight with our

Money so i like to be very organised and i think if you are an organised person it does make it a lot easier it’s all about inflation so high inflation means things are getting more expensive so cost of living is squeezed so the rba needs to get that down and the way that they get it down is to increase interest rates senior associate and economist at the gratton

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Institute joey maloney there’s a real difference between people who borrowed before covert and people who borrowed during common people who borrowed before covert use the lockdowns to increase their savings and get ahead on their mortgage it’s a different story for investors post lockdown people who borrowed late last year in particular are facing that double whammy

Of big of interest rate increases on big loans i’ve even noticed with our groceries that i’m spending up to a hundred dollars extra a week at the moment so you add that on top with petrol as well we could be anywhere eight hundred to a thousand dollars a week extra with our payments so how will today’s mammoth rate rise change what you pay each month it’ll mean

The average variable rate has moved from around 2.5 percent to 3 so for a 600 dollar loan paid off over thirty years monthly repayments will jump from two thousand three hundred and seventy dollars to two thousand five hundred and twenty nine dollars over the life of the loan that’s an extra fifty seven thousand two hundred and three dollars and fifty seven cents

But of course it’ll inevitably be more than that once future rate rises kick in i think costs will need to be cut somewhere whether it’s going out for dinner um unfortunately family holidays trying to be more smart savvy with your money at the supermarket but there’s one thing you can control at the moment i think we’re sitting on about 2.59 and that’s currently

With anz i know there are some better deals out there at the moment and i think with the interest rates hikes we will definitely be shopping around to try and secure a better deal courtney is all over it when it comes to refinancing their loan but she’s the exception americans refinance their loans every six months they just don’t stop australians are not lazy

But they get comfortable i think australians could save a fortune boris is executive chairman of mortgage broking business yellow brick road which nine entertainment has a share in you can’t be sitting back complaining of any straight rises if you can go and save effectively for rate rises just by refinancing so go and do something about it don’t just sit there

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And whinge about the reserve man get off your tush and do something about it straight away you hurt him there are a huge swathe of australians who never bother to check their interest rate they don’t know if they’re paying too much and they never actually refinance so at the end of the day they’re paying way too much mark explains you will have to fork out fees

To refinance typically around a thousand dollars to leave one lender and join another but it’ll likely be worth it as an example he crunches the numbers on refinancing a five hundred thousand dollar loan they borrowed the money five years ago so they’ve got 25 years to go on the loan their interest rate is 3.35 their monthly repayments to 2463 this is what the

Interest rate they could be paying they could be paying 2.49 when you re-borrow though you borrow for 30 more years so you go back to the 30 year back to 30 year loan but your repayments 1973 per month so by refinancing your loan finding a better rate your monthly repayments are going down by almost 500 bucks and of the life of the loan you’re saving twenty

Thousand dollars an interest twenty eight thousand dollars in interest there’s a lot of money there’s a lot of holidays that’s like a lot of annual holidays those savings could go towards a holiday family costs or back into the loan if you take the 490 that you’re saving if you take that 490 and you pay it off every month off your principal in other words make

An extra payment then you’ll reduce this 30 year loan down to 21 years and 11 months you can go through that process there on this app you go into the calculators and you work it out mark’s business is one of many that’s designed a lending app it asks you what your income is and takes you right through the whole process until you get to the home loan approved i

Just could not apply for a new loan on my phone i need to go in and talk to a person and look them in the eye i mean of your customers what percentage are doing it all online right now a small percentage but a lot of them are making their inquiry online with the pressure families are facing only getting worse it begs the question whether the great aussie dream

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Is all it’s cracked up to be probably not not so much these days there’s a cohort of people say people under 30 who have taken the view they may never buy a property or a home oh it’s always been a dream of mine to buy my own home but for this 20 year old cafe worker the dream is alive and well and she’s finally achieved it i’ve always had a second job on the

Side no matter what it is like right now i’m working at kohl’s as well and i work there once or twice a week on top of my full-time job just go to work take any shift you can make as much money as you can and save as much as you can courtney’s under no illusions that more rate rises will mean she needs to find a higher paid job and borrowing in the current climate

Wasn’t a fun process when you see the interest rates go up you have to resubmit all your bank statements and go through the whole process again with the bank of getting a new loan amount higher interest rates yes that reduces your borrowing power but it does that for everyone so that should lead to lower prices and perhaps the pain won’t go on for as long as we

Fear something has to give the reserve bank can’t control the cost of living what the reserve bank can control is the number of rate rises and my feeling is that the reserve bank will not do 14 rate rises because they don’t want to destroy the economy and this advice from one savvy mortgage holder it’s no good having funds sitting in your bank account you either

Need an offset account or put it on your mortgage and get a home loan that’s got a redraw facility it’s a very good advice

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Finance guru's blunt advice amid interest rate hikes | A Current Affair By A Current Affair