According to Reserve Bank of Australia data, more than a third of Australian home loans are on fixed-rate terms, with two-thirds of these due to expire by the end of 2023.

RACQ Head of Lending Product and Operations Medina Cicak said while there had been a lot of talk about a mortgage cliff in 2023, homeowners should be alert, not alarmed.

“As part of the loan application process, lenders assess a borrower’s capacity to manage a higher rate to ensure they can afford to cover their repayments in the event of a rate rise,” Ms Cicak said.

“We acknowledge, however, that circumstances can change, and some people may be finding themselves in a situation where they feel overwhelmed or concerned about how they will manage the upcoming increases.

“Now is the time to be proactive by talking to your bank about your options and looking at how you may need to reprioritise or cut back on your expenses.”

Ms Cicak said there were a number of ways Queenslanders could prepare for higher rates:

• Find out the variable interest rate available to you when the fixed rate period ends and speak with your bank to see if they will give you a better deal.
• Examine your finances and write up a budget, so you can see exactly where your money is going and where you can cut back.
• If you can, make higher repayments now before your fixed rate ends to help bring down your loan. You can also put money into a savings account or pay down more of your variable rate if your loan is split.
• Look at refinancing options. Some banks offer better rates if your loan to value ratio (LVR) is lower, so if you have more equity in your home, you could be rewarded.

According to the Australian Bureau of Statistics, a record number of borrowers switched lenders in November with the value of owner-occupier refinancing increasing 9.1% to reach a new high of $13.4 billion.

Ms Cicak reminded Queenslanders that refinancing can come with fees and if the equity in your property is less than 20%, you may have to pay Lender’s Mortgage Insurance.

“Rising rates and cost of living pressures are challenging for many Queenslanders and I want to reassure members that RACQ Bank is here to help,” Ms Cicak said.

“Our team is contacting members coming off a fixed interest rate home loan to discuss their options.

“We’ve also removed fees for our members to change from one RACQ Bank loan to another to ensure they have a home loan that best suits their needs.

“If you are experiencing financial stress, please give our team a call. They can look at your situation and find the best solution for you, whether that is fast-tracking financial hardship requests or providing flexibility with payment options.”

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Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.