Here’s how doctors with home loans can make the most of the rate pause.
17 April 2023
Written by Jacqui Lombard
Over 20 years’ experience in finance
To the relief of many Australian homeowners, the RBA announced a cash rate pause at their April 2023 board meeting. The reasoning behind their decision was to evaluate the effects of the ten consecutive cash rate rises since May 2022 in combatting inflation and consumer spending.
The reprieve is not to be misinterpreted as the cash rate peak, or a sign that there will be an extended pause or a drop in rates anytime soon. The RBA can offer no assurances, with RBA Governor, Phillip Lowe, stating, “The decision to hold rates steady this month does not imply that interest rate increases are over…I think it’s too early, way too early, to be talking about interest rate cuts and the balance of risk lies to further rate rises”.1
This ambiguity stems from the fact that not all homeowners have yet felt the impact of the rate hikes. Due to bank delays in changing monthly home loan payments and various households still on fixed rate loans, only about two-thirds of the RBA’s rate rises since May 2022 have been passed on to mortgage holders.2
Which homeowner are you?
Doctor, are you a homeowner who has already rolled onto a variable rate or are you a homeowner with a looming fixed rate expiry date? No matter which one, refinancing may be worth considering.
Reasons to refinance may include:
- To secure a better interest rate
- To save on repayments
- To access home equity for personal or professional goals e.g. Travel, renovate, purchase a practice
- Your fixed rate home loan has expired or about to
- Your loan rate is higher than the rate your lender is offering new customers
- Your home loan hasn’t been reviewed for some time
With the cash rate currently at 3.6% and the average homeowner who hasn’t negotiated a better interest rate paying around 6.36% on their home loan according to RateCity.com.au3, it is no surprise that refinancing is trending. ABS lending indicator data revealed that $19.87 billion worth of mortgages were refinanced in February, making it the highest monthly amount in Australian history4.
In addition to the above reasons homeowners may refinance, lenders are also competing to retain and win clients with cashback offers, lenders mortgage insurance waivers, Frequent flyer points, and fee reimbursements.
Explore your refinancing options today
The rate pause and the April holiday season is the perfect time to start investigating your home loan options. RateCity research director Sally Tindall said, “While CBA, NAB and ANZ have scaled back their new-customer discounts in the last three weeks, the market is still incredibly competitive for borrowers looking to switch, particularly if they’re willing to go beyond these big banks”.
As a doctor, with a busy schedule, you often do not have the time to research your property value and speak with every bank to find the best financial solution. Overcome this hurdle by speaking with a finance specialist who can do the legwork of getting all the bank offers for you to choose the best option for your situation.
Avant has a team of medical property finance experts that can help save you time, money, and headaches by reviewing your loan. They understand and can explain your industry and career trajectory to prospective lenders, some of whom offer preferential treatment to doctors. Pleasingly, lenders are still enthusiastic about low-risk borrowers, and such favour of your profession will benefit you when looking to negotiate a new rate or refinance.
Request a free consultation here.
- https://www.abc.net.au/news/2023-04-05/philip-lowe-rba-governor-interest-rate-speech/102188510
- https://www.afr.com/policy/economy/is-australia-the-lucky-country-on-interest-rates-20230404-p5cxuu
- https://au.finance.yahoo.com/news/interest-rates-pause-heres-why-you-shouldnt-011711665.html
- https://www.ratecity.com.au/home-loans/mortgage-news/refinancing-hits-new-record-high-borrowers-combat-rising-rates
IMPORTANT: The information in this article does not constitute professional advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek professional advice before acting or relying on any of its content. The information in this article is current to 6 April 2023.
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