The Reserve Bank of Australia announced that interest-only mortgage loans (OIs) worth $ 120 billion would be transferred into principal and interest loans (P & I) over the next three years . Since many borrowers would not qualify for refinancing under the stricter loan criteria, many could be forced to pay up to 40% more for their loans.
Whatever the potential consequences of this directive, Australians do not quite lose their grip on IO mortgages. In fact, a new study by Gateway Bank, a client-owned company, revealed a sense of division of the type of loan, with 50% of Australians believing that IO home loans were bad, the other half the same. saying good.
The study found that the negative opinion on interest-only home loans increased by 2% over the previous year, which echoed the recent market movements that implicated the decision. borrowers to move quickly from IO agreements to P & I.
The Gateway Bank stated that this reflects the current regulatory environment, with the Australian Prudential Regulatory Authority (APRA) maintaining its 30% interest-only lending cap despite rising benchmark lending targets. investors in April.
Paul Thomas, the bank's chief executive, speaks to people with only interest-only repayment plans and insists on the need to finalize their financial strategies as soon as possible in order to minimize budget deficits.
"The RBA has estimated that for many Australians, repayments could reach 40%, with loans going back to principal and interest. This is a significant push that will severely affect family outcomes. It is therefore not too early to start planning for the next increases in repayment obligations. In fact, the sooner the better, "he said.
Earlier this year, the RBA also announced a limitation on interest-only loans, in which it estimated that about 30% of the current national mortgage debt would fall from IO to P & I, increasing significantly exponential monthly repayments of nearly 1.5 million. borrowers.
Thomas welcomes the increase in repayments, insofar as it also offers homeowners an opportunity to start building equity on their properties.
"The affordability of a mortgage-only interest-bearing loan can be attractive, but Australians should avoid the trap of extending their interest only period or refinancing themselves. in another loan only composed of interests, as this would further distance them from financial freedom "he said. "The sooner you start choosing to repay principal and interest, the sooner you can build equity in your properties and grow your wealth."
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