Home' The Monaro Post : The Monaro Post Newspaper, January 3, 2018 Contents THE MONARO
PROPERTY MUSTER FOR SALE
Wednesday January 3, 2018
With no change to the official cash rate in
sight, fewer Australian borrowers are opting
for fixed rate home loans.
The latest national home loan approval data
from Mortgage Choice found fixed rate home
loans accounted for 24.32% of all mortgages
written throughout November.
“We saw a slight drop in the proportion of
buyers opting for fixed rate home loans last
month,” Mortgage Choice chief executive
officer John Flavell said.
“In fact, the last time fixed rate demand
was this low was back in March 2017. There
are a couple of reasons for this drop in fixed
“Firstly, the Reserve Bank of Australia has
kept the cash rate on hold at 1.5% for more
than a year. Looking forward, there is nothing
to suggest that the Reserve Bank will start
to rapidly and dramatically increase the cash
rate. Borrowers are acutely aware of this and,
as a result, are happy to ride the variable rate
wave rather than lock themselves into a fixed
rate home loan.
“Moreover, a number of Australia’s lenders
are offering competitive rates and discounts
on their variable rate home loan products.
Over the last few weeks, we have seen a
number of lenders trim the interest rates on
some of their variable rate products, which
could be making these types of products
more desirable amongst borrowers.”
Across the country, Queensland boasted
the highest level of fixed rate demand, with
this type of product accounting for 28.99% of
all loans written throughout November, down
from 31.70% the month before.
South Australia wasn’t far behind, with fixed
rate products accounting for 27.16% of all
loans written throughout the month.
At the other end of the spectrum, Victoria
had the least appetite for fixed rates, with this
type of home loan accounting for just 13.47%
of all home loans written throughout the state.
On a whole, variable interest rate loans
were the most popular products, making
up 75.68% of all loans written by Mortgage
Looking ahead, Mr Flavell said he wouldn’t
be surprised to see a slight reduction in
fixed rate demand over the coming months,
especially if the Reserve Bank of Australia
continues to leave the official cash rate on
“The fact is, most lenders are offering very
competitive variable rates at the moment.
Borrowers are acutely aware of this and are
looking to take advantage of the low variable
“Of course, there are also some very
competitive fixed rates on offer at the moment
too. With that said, regardless of which
product a borrower opts for, they can be
assured of securing a very sharp rate.”
Mr Flavell said with interest rates currently
hovering around historical lows, there really
has never been a better time to be a home
“Rates are sharp and some of the heat has
come out of the property market. Both of
these elements combined make for a perfect
buying market,” he said.
Fixed rate demand falls
Three in four Australians label
themselves ‘financially savvy’
More than 77% of Australians consider
themselves to be ‘money smart’, new data has
According to Mortgage Choice’s inaugural
Australian Financial Savviness Whitepaper,
77.2% of Australians consider themselves to
be good with their money.
“Interestingly, when we break the data down
into age groups, it is clear that those over the
age of 60 and those under the age of 30 boast
the highest proportion of ‘financially savvy’
individuals,” Mortgage Choice chief executive
officer John Flavell said.
“Over 85% of those aged 60 years and over
were happy to label themselves ‘financially
savvy’, while almost 80% of those under the
age of 30 gave themselves the same title.
“Somewhat unsurprisingly, those under the
age of 30 not only considered themselves to be
‘financially savvy’, but far superior to their peers
when it comes to being money smart.
“Over 55% of those under the age of 30
considered themselves to be “a lot smarter”
than their peers when it came to money. At the
other end of the spectrum, just 35% of those
over the age of 60 said they were smarter than
“This raises an interesting question: ‘what
does it mean to be ‘financially savvy’, and does
the definition change depending on who you
“Well, in short, it would appear most
Australians would define ‘financial savviness’
in the same way. According to the surveyed
respondents, to be ‘money smart’ you need to
be ‘street smart’ and have the ability to make
good decisions with the money that you have.”
Looking at the data, there are a variety of
different ‘financial hacks’ that self-appointed
‘financially savvy’ Australians employ.
Just over 60% of Australians who labelled
themselves ‘money smart’ said they will review
their finances regularly, checking their bank
accounts at least once weekly.
Meanwhile, 90% of ‘financially savvy’
Australians said it was critical to take a
proactive approach towards their finances by
working off a drafted budget. In addition, 68%
of ‘money smart’ Australians said they save
more than 10% of their regular pay check
and put it towards ‘rainy day’ expenses, while
68% said they thoroughly researched their
financial options online before making any final
decisions with their money.
Finally, 71% of ‘financially savvy’ Australians
said they ensure their credit card is paid off in
full each month and they actively ensure they
do not take on more debt than they can easily
Of course, becoming ‘financially savvy’ isn’t
without its hurdles.
According to the Whitepaper, more than 1 in
3 Australians struggle to make savvy financial
decisions because they are faced with too
“Choice has long been considered a ‘must
have’ within financial services. In fact, we
regularly put the concept of ‘choice’ on a
pedestal. It is argued that an industry with an
abundance of choice is strong,” Mr Flavell said.
“Yet, our data makes it clear that Australians
are currently overwhelmed by too much choice.
This is where finance professionals come into
play. Mortgage brokers and financial advisers
play an important role in helping Australians to
understand the choices available to them.
“While our data found that 1 in 3 Australians
feel as though their circumstances do not
warrant seeing a financial adviser, 73% of those
who did seek professional financial advice
said their personal and financial wellbeing was
improved as a direct result.
“Looking ahead, it is clear that Australians
rate financial savviness as a vital life
component. And while 77.2% of Australians
already consider themselves to be ‘money
smart’, 93% of surveyed respondents said it
is critical that they continue to improve their
“Of course, all this data begs the question:
‘what is so important about being ‘financially
“According to our Australian Financial
Savviness Whitepaper, ‘financially savvy’
Australians who are smart with their money and
strive to ensure each financial decision they
make is the right one for their needs, are more
likely to cope with not being able to work for
long periods of time.
“More specifically, ‘financially savvy’
Australians are twice as likely to live a
comfortable retirement and 1.5 times more
likely to have emergency funds saved for those
‘rainy day’ expenses.
“In a nutshell, financially savvy Australians are
more likely to be able to cope with life’s various
hurdles as and when they arise. And, in today’s
market, that is very important.”
Two in five Aussies don’t know
their mortgage interest rate
Almost 40% of Australians do not know the
interest rate on their home loan, new data
Mortgage Choice’s Australian Financial
Savviness Whitepaper found 38% of
Australians did not know the current
interest rate on their mortgage.
“The fact that two in five Australians do
not know the interest on their mortgage is
alarming,” Mortgage Choice chief executive
officer John Flavell said.
“It seems for many borrowers it is easy
to take a set and forget attitude towards
their mortgage. However, this can end up
costing them substantially over the longer
“A home loan is one of the biggest
financial investments a person will make in
their lifetime. And, if they don’t review it on
a regular basis, they could end paying a lot
more than they should.
“In the past two years the cash rate has
been reduced by 50 basis points and a
huge portion of this has been passed onto
mortgage holders in the form of lower rates.
As such, anyone who hasn’t reviewed their
mortgage in the past two years could find
that the interest rate on their home loan is
significantly higher than it needs to be.”
According to the Whitepaper, Australians
over the age of 60 were the most likely to
not know their home loan interest rate, with
46% admitting that they did not know the
interest rate on their mortgage.
Just over 40% (40.4%) of those under
the age of 30 did not know their mortgage
interest rate, while 36.9% of those aged
between 30 and 39 years said they were in
the same boat.
Mr Flavell said borrowers needed to keep
up to speed with their mortgage as lenders
regularly make adjustments to the interest
rates on their home loan products.
“In recent months, we have seen many of
Australia’s lenders adjust the pricing across
their owner-occupied and investment home
loan products,” he said.
“These slight changes can make a
significant difference to what a borrower
has to pay each month.
“For example, the monthly repayments
on a $500,000, 30-year home loan with
a principal and interest mortgage rate of
4.5% would be $2,533. If the interest rate
was to come down by 50 basis points,
the monthly repayment would be $2,387 –
which equates to a saving of $146 a month.
“Those borrowers who don’t want to
miss out on savings are advised to review
their mortgage at least once a year.
“Most importantly, they should be
speaking to a mortgage broker who can
assess their current home loan and ensure
that they are in the best product with the
most competitive interest rate for their
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