Interest rate rises could actually stimulate borrower activity

Some mortgage brokers believe if the next move in interest rates is upward, it may actually lead to more business for them. 

Many economists are tipping an interest rate rise later this year.

If rates do go up it can lead to a cooling of property prices that are rising due to low interest rates. This then stimulates buyers who can enter the cooler market. 

Successful Ways director Scott Durrant explained this to The Adviser. 

“A lot of people aren’t buying because prices are going up too high, so they’re waiting for prices to drop,” he said. 

Rates going up means prices will stabilise, so more people will buy.” 

Loan Market Melbourne franchisee Marios Rokka told The Adviser that cash rate increases always generated more activity because clients wanted to lock in fixed rates. 

“What tends to happen is any upward move tends to create a buzz around fixed rates and refinancing,” he said. 

“What we’ll find is all new entrants into the mortgage space will begin to get a bit of fear, and our phones will start ringing about fixed rates.” 

Home Loan Professionals managing director Nikki Meldrum, however, also speaking to The Adviser said an interest rate rise would be bad for her clients and her business. 

“I don’t think a rate rise would be good for the industry at the moment,” she said. 

“I think we need to stabilise and let people feel a bit of comfort that they’re not going to be hit suddenly with high interest rates.” 

In light of this, it seems the property market will still have plenty of activity regardless of any rate hikes from the RBA in the near future.


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