As the Reserve Bank (RBA) gears up for its upcoming meeting, a striking 71% of mortgage holders are depending on a rate cut to manage their payments effectively.
The urgency for relief comes after a series of 13 consecutive rate hikes that have left many Australians hoping for a downturn in rates to alleviate their financial burden.
Mozo’s survey of 1,020 mortgage holders highlighted a precarious dependence, with a considerable segment of homeowners pinned on a favourable decision by RBA in February.
Rachel Wastell (pictured above), Mozo’s money expert, commented on the trend.
“Nearly three-quarters of mortgage holders are relying on an interest rate cut from the RBA to keep on top of their repayments, as they continue to struggle with the impact of 13 rate hikes,” Wastell said, stressing the risky nature of banking on an uncertain rate cut.
Amid this backdrop, Wastell advised homeowners to take proactive steps rather than wait on the RBA's decision. She suggested exploring refinancing options or negotiating better rates with current lenders as immediate alternatives to potentially reduce costs.
“Refinancing your mortgage now could give you a rate cut today, with no RBA decision required,” Wastell said.
The Mozo survey revealed that switching to a lender with a lower rate could be significantly beneficial.
For instance, a mere 1%p.a. difference in rates could lead to monthly savings of up to $230 on a $500,000 mortgage.
If RBA does proceed with a rate cut, the survey indicated varied generational plans for the extra funds.
Most plan to save the additional money, though strategies differ slightly by age group, with some preferring to reinvest in their mortgages or other debts. This indicated a collective intent among Australians to fortify their financial positions in uncertain times.
