The big banks were offering cashback deals and competitive rates to grab their share of the refinancing boom, but the trend has reversed as margins start to come under pressure, leaving some borrowers trapped between a mortgage cliff and a mortgage prison.
abc.net.au/news/big-banks-raise-interest-rates-for-new-borrowers-margins/102707758Mortgage broker George Samios is running the rule over many of the home loans on his books.New customers may now be paying around 0.4 percentage points more than existing borrowers, according to RateCity data
"Our biggest concern this year is all our customers coming out of those 1.99 per cent fixed rates, rolling on to a variable rate in the 6s," the Brisbane broker says. At the start of the year, banks were fiercely vying for their share of the refinancing boom, offering cashback offers and competitive interest rates to attract borrowers away from their existing lenders."At the peak, we saw 35 lenders offering cashback deals to new customers willing to refinance over to them," RateCity research director Sally Tindall tells The Business.
As the banks start to pay the price for competition, rates for new customers have begun heading higher. "The industry call it rate creep — so once you're on the books, basically you're beholden to whatever the lender wants to do," FBAA managing director Peter White says.Since March, the RBA has raised the cash rate three times, by a total of 0.75 percentage points.But, they have increased the advertised rates for new customers by even more.
"This will continue for a little while to come, there's probably another six months of it until the end of the year to see the final impacts of it and how people actually deal with it," Mr White says.
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