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What’s on the Horizon ... Interest rates on the move The much anticipated decision by the Reserve Bank of Australia (RBA) to begin increasing official interest rates in May was met with either relief or trepidation – depending upon which side of the depositor / borrower fence people sat on. With the official rate having been anchored at an historic low of 0.10% since November 2020, depositors have been doing it tough learning to live with interest rates that are scarcely in the black, and not surprisingly these members are eagerly looking forward to more RBA increases.
As a mutual banking institution, Horizon straddles both sides of the depositor / borrower fence, seeking to offer competitive interest rates for all our members. Horizon's 'Net Interest Margin' (being the difference between our loan and deposit rates) is now the tightest in our history, and represents a very pleasing win for the membership as a whole. In the absence of a reliable crystal ball it's difficult to predict the course of interest rates over the coming years.
Graph of the Cash Rate Target
ULLADULLA Woolworths Complex, Princes Hwy & 02 4454 7800 WOLLONGONG 27 Stewart Street & 02 4224 7700 BSB 802-124 e: info@horizonbank.com.au p: 1300 366 565 Online Banking horizonbank.com.au
Horizon Credit Union Ltd ABN 66 087 650 173 AFSL and Australian Credit Licence Number 240573 trading as Horizon Bank All information correct at the time of printing: 1/06/22
On the other side of the fence borrowers have benefitted from low variable and fixed rates, but with the low rates fuelling a property boom, the average mortgage size has doubled since 2010 to almost $600,000. As a consequence, mortgage repayments are not necessarily any lower than they were a decade ago in spite of the low interest rates.
Irrespective of rate changes however, Horizon will continue doing what we do best – offering our members competitive and personal banking services. Thanks for your continued support of Horizon.
Horizon is always delighted when we can assist a first home buyer make that first big step into their own house, but the sad reality is that it is becoming increasingly difficult for young people to afford a home – even for the lucky few who get a bit of help from the “Bank of Mum & Dad”.
Jon Stanfield, CEO