New analysis has revealed that the global financial crisis (GFC) and its resulting higher funding costs are slugging investors hundreds extra a month on their mortgages.
A $300,000 mortgage is typically costing investors an extra $350 per month, research by Smartline Mortgage Advisers regarding the Reserve Bank’s (RBA) cash rate and the variable interest rate charged by the major banks has revealed.
“Following virtually every RBA cash rate movement over the past four years, the lenders have kept a little bit for themselves,” Smartline’s executive director, Joe Sirianni, said.
The increase between the cash rate and the variable interest rate charged has increased by 1.5 per cent since 2007, they found, equating to the $350 increase.
A cash rate of three per cent and variable home loan rates at 5.7 per cent mean this gap is currently even bigger, at 2.7 per cent.
“Back in early 2009 when we last saw a three per cent cash rate, borrowers were paying around 5.2 per cent for their variable mortgage – fast forward four years and they are now paying 5.7 per cent,” said Mr Sirianni.
“However, to be fair, most of this additional margin has been absorbed by higher funding costs.
“This is the hidden cost of the GFC and one that directly impacts on the hip pockets of every Australian with a home loan.”
Future cuts after the last two, he suggested, may now be headed by the banks rather than the RBA.
“With international funding costs having eased, strong bank profits and increasing competition in the home loan marketplace, we well may see the banks taking the lead on bringing rates down,” Mr Sirianni said.