Well, that wasn’t quite the spring update borrowers were hoping for.
The RBA has today, 29 September, lifted the cash rate by 0.25 percentage points to 4.60%, with inflation continuing to prove stubborn. Higher energy prices and ongoing business cost pressures contributed to the decision.
For those of you working with clients preparing to buy land or start a build, there’ll understandably be a few questions about what happens next. Every client’s position is different, so the useful conversation now is what any change in their lending rate means for their budget, borrowing capacity and plans.
The impact on repayments will depend on their lender and loan type. Clients with variable loans should check their lender’s announcements to confirm any rate changes and when they take effect.
For those already building, there’s another factor to consider. Construction loans are generally drawn progressively, with interest charged on the amount released. If the variable rate increases, interest costs can rise alongside the growing loan balance as further progress payments are made.
This makes it a useful time to reconnect with clients approaching land settlement or finalising their building plans. Reviewing their borrowing position, expected repayments and available cash buffer can help identify whether their budget needs adjusting before they take the next step.
If a client is unsure how today’s announcement affects their plans, send them our way. We can work through the numbers, explain their options and help them move forward with a clearer picture.
