Will Home Loan Interest Rates Increase Further in Australia in 2023?
The current state of the housing market in Australia
There's no doubt that the housing market in Australia is currently experiencing a boom. Property prices have been on the rise for several years now, and there's no end in sight. This is good news for those who already own property, but it's bad news for those who are looking to buy. The high price of property is one of the main factors that will influence mortgage rates in 2023.
There are a number of reasons why property prices are so high at the moment. One of the most important factors is population growth - Australia's population is growing at a rapid rate due to immigration and this is putting pressure on the housing market. Another factor that's contributing to high property prices is the previously historically low interest rates, which made it cheaper to borrow money, so more people were able to afford to buy property.
Factors that will influence Australian mortgage rates in 2023
In addition to the current state of Australia’s housing market, there are a number of things which influence home loan interest rates:
- The Reserve Bank of Australia's cash rate: The RBA decides on the official cash rate for Australia. This is the rate that banks use when they lend money to each other overnight. When the RBA raises the cash rate, it usually leads to an increase in mortgage rates. The RBA is currently keeping interest rates steady at 4.10%, but there's speculation that they may start to rise again towards the end of 2023.
- Inflation: When inflation is high, it means that prices are rising, and this puts upward pressure on interest rates.
- The economy: The state of the Australian economy will also have an impact on mortgage rates. If the economy is doing well, then interest rates are likely to rise, but if the economy is struggling, then rates may stay low or even fall.
How to get the best interest rate on your home loan in Australia
- Shop around: Don't just take out a mortgage with the first bank that you come to
- Fix your interest rate: If you're worried about rates going up, you could fix your interest rate for a period of time. This means that your interest rate will stay the same, even if rates rise.
- If possible, make a large deposit: The size of your deposit will have an impact on the interest rate that you're offered. If you can afford to make a large deposit, then you're likely to get a better rate.
- Maintain a good credit score: Your credit score is one of the things that lenders look at when they're assessing your loan application. If you have a good credit score you will be offered a lower rate however there are Non Conforming Lenders who do not credit score.