Did you know that there are lenders that will apportion a borrower’s household expenses and shared existing commitments with a non-applicant spouse, which can help increase the borrowing capacity of the applicant?
The lender will assess the borrower’s portion of any joint expenses and existing commitments with a non-applicant spouse (same household), based on the borrower’s income as a percentage of the total household income.
For existing joint commitments with a non-applicant (who is also not a spouse of the borrower), these can be apportioned based on the higher amount of the repayment, borrower or asset ownership (where applicable) as a percentage.
RBA Hints At Further Interest Rate Rises
The nine board members were very close to raising the cash rate another 25 basis points in April due to inflation and labour market. The Reserve Bank’s decision to pause its record run of interest rate rises earlier this month was lineball, with the central bank board deciding it needed more information to determine “when and how much more” they would be lifted.
Minutes from the 4 April rates meeting, released on Tuesday, show the nine board members examined at length the case for another 25 basis-point increase. That would have made it 11 consecutive rate hikes and lifted the cash rate to 3.85%. The case for another rate rise included the usual comments that inflation – running at an annual pace of 6.8% in February – “remained too high and the labour market was very tight”, the minutes show. In addition, the board weighed up two other factors that “were relevant to the case” for more interest rate increases. These were the faster than expected pickup in population growth as immigration levels rose, and the “increased risk of larger wage increases in parts of the economy”. However, the board ended up opting to halt the rate hikes in order to gather more information on the economic impacts of the 10 increases so far, given their full effects would take time to be felt. “Members judged that monetary policy was already restrictive,” the minutes showed.
By the 2 May meeting, board members will have access to the March quarter consumer prices index figures that are scheduled for a 26 April release. RBA staff are also due to “present a full set of updated forecasts” at that May meeting.
In the end, there was “a stronger case to pause” at the April gathering than to lift the cash rate. Still, “it was important to be clear that monetary policy may need to be tightened at subsequent meetings”, implying that the RBA may still have more than one rate rise to come.
Fixed Rates On The Down
More and more lenders are reducing their 2-5 years fixed rates after the Reserve Bank of Australia (RBA) held the cash rate at 3.6% after 10 consecutives rate hikes. Is it work fixing to a longer term at the current rates? It depends on your preferences, the rate on offer in comparison to the variable rate, and the risk of further rate rises.
