A vast majority of Australian homeowners were bracing for an interest rate hike prior to the Reserve Bank’s decision to increase the cash rate in May, according to new research from the Commonwealth Bank of Australia.
The study showed that more than 90% of Australian homeowners have taken steps to mitigate the impact of rising mortgage rates, with 47% cutting their living costs, 42% building up their savings, and 38% making additional repayments on their home loan to get ahead. Meanwhile, 37% of Australians have been putting money into their offset/redraw account and 33% have been looking for cheaper providers for utilities and services.
Michael Baumann, CBA’s executive general manager of home buying, said lenders have an important role in informing customers of the range of tools and offers available to them.
“We know that one in two CommBank customers are more than three months ahead of their home loan repayments, and it’s encouraging that the majority of Australian homeowners are taking proactive steps to continue to improve their financial position with rates expected to continue to increase over the next 12-18 months,” Baumann said. “We are uniquely positioned to help home loan customers manage cost-of-living pressures through exclusive offers from our suite of innovative partners, including local telecom provider More that offers great savings on unavoidable and ongoing costs like internet. Through NetBank and our industry-leading app, eligible customers with a variable-rate loan are also able to apply to split their home loan at any time. This can give them the certainty of a fixed rate and the flexibility and features of a variable rate, including access to multiple offset accounts on eligible home loans. Depending on their circumstances, they could save thousands in interest expenses over the life of their loan.”
Baumann said CBA has seen higher splitting activity and a shift to fixed rates in response to the recent cash-rate hike as customers explore their options. Splitting activity has more than doubled since the start of May.
CBA has a range of resources available to help customers manage their home loan in a rising rate environment, including a home loan repayments calculator and a budget planner tool. Customers can also connect with the bank’s financial assistance solutions team.
