Increase In Fixed Interest Rates On The Horizon

Published by Otto Dargan on May 24, 2021

The Reserve Bank of Australia (RBA) had increased its Term Funding Facility (TFF) for banks to $200 billion until June 2021. However, with TFF ending on 30 June 2021, how will it affect you?

What is a term funding facility (TFF)?

The term funding facility (TFF) was announced on 19 March 2020 due to the economic fallout from the pandemic.

A TFF provides funding to banks at a low-interest rate that banks will pay over three years.

With the RBA keeping the cash rate at 0.1%, this is also the interest rate for the TFF.

The TFF provides banks access to low-cost to help reduce interest rates for borrowers.

However, with TFF ending on 30 June 2021:

  • Banks will rely on the wholesale market for their funding.
  • There is a potential for an increase in higher fixed rates, i.e. banks would remove their cheapest fixed rates from the market. CBA and NAB have already hiked their interest rates.

The end of TFF comes when property prices are soaring, and the market is abundant with buyers and sellers.

Interest rates are expected to continue rising over the next few months, even if the RBA doesn’t increase the cash rate, because lenders are about to pay more to secure funds that they can lend.

Other banks could potentially hike their fixed rates soon.

To know if fixing your home loan is a good idea, talk to our mortgage brokers.

We will let you know the latest updates on fixed rates and help you get approved for a home loan. Call us on 1300 889 743 or enquire online.

Victorians buying in regional areas

The 2021-22 Victorian budget announced on 20 May 2021 confirmed an increase in stamp duty and land taxes for higher-priced properties.

First-home buyers accounted for 78% of all settled transactions in outer metropolitan and regional Victoria.

Since March 2020, 81% of housing transactions settled in regional Victoria were under $600,000, in contrast to 47% in greater Melbourne.

With property prices rising, most first-time buyers can’t afford more than $600,000 and those prices won’t get you much in the capital city.

Even preliminary auction figures show that Melbourne’s property market was the busiest, with a clearance rate of 77.6% across 1,286 auctions.

The property market is still hot, but we have to wait and see if winter will bring a slowdown to auction numbers.

With flexible working hours, and buyers moving away from city hubs to a better lifestyle, there are affordable options for first home buyers in regional areas and other states.

Our mortgage brokers are experts at helping you get approved to buy a home in Victoria.

If you need property reports, suburb reports or help to get your mortgage approved, call us on 1300 889 743 or enquire online today.