In a climate where the Reserve Bank's hiked the Official Cash Rate (OCR) a mammoth 12 times since October 2021, is there any relief in sight for mortgage holders?
Yes, but we'll have to wait a while yet. That’s according to BusinessDesk Investments Editor Frances Cook.
"Once things are cooling down and we're already seeing that happening, then they can start bringing those interest rates back down,” she told Fair Go.
“So we're seeing all the signs that it's happening but it [takes] six months to a year for it to bed in.”
In an effort to curb inflation, the Reserve Bank's raised the OCR from .25% in October 2021 to 5.5% last month. That's meant some hefty increases to mortgage rates.
"We're getting a lot of signs that the worst of this pain might be in the next six months to a year, so what you want to do is find some way to survive," Cook said.
That, she added, might mean taking on extra hours at work, cutting discretionary spending, or pushing out your loan term.
Mortgage Broker Jess Pronk said reviewing the likes of your utilities and insurance is a good idea, as is making sure your credit is in good shape.
"Taking on additional Afterpays and Laybuys is a really bad idea right now, [as is] letting your account go overdrawn unintentionally, because payments have gone out. You can't have those cracks start to appear in your credit file.”
She said that’s because if you need to borrow more, banks can identify those cracks.
“Those are the things that the banks have really sophisticated software on.”
And Pronk said if you situation is dire, and you are in serious financial hardship, talk to your bank as soon as possible.
“It's very common to want to bury your head in the sand when you're in that situation, but the bank's have got specialist teams.”
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