How do interest rate changes affect you?

For many Australians, a rise in interest rates will mean increased repayments on mortgages, loans and credit cards. With less disposable income, many people may need to tighten their belts.

Interest rate rises can be tough for families and small businesses, as increased mortgage and debt repayments can make life more difficult and expensive. While lower interest rates can mean a respite in terms of lower debt repayments, or provide an opportunity to get ahead on your mortgage.

When reviewing your finances make sure you look at how interest rates are tracking and if necessary, build in a buffer for further increases that might affect your repayments. It may also be worth looking at consolidating your debts and renegotiating your current interest rates to protect yourself from future increases.

The below summarises some of the economic consequences of interest rate changes.

Increase in interest rates

  • Increases the cost of mortgage interest payments
  • Reduces personal disposable income
  • Increases incentive to save rather than spend
  • Strengthens the value of the Australian dollar
  • Reduces consumption and investment

Decrease in interest rates

  • Makes mortgage interest payments more affordable
  • Increases personal disposable income
  • Encourages spending
  • Weakens the value of the Australian dollar
  • Encourages investment in property

Interest rates rises are generally good news for people with savings. For those looking to invest in term deposits or bonds, an increase in interest rates will generally mean higher rates of return. Term deposits usually offer higher returns in a rising interest rate environment and lower returns in a falling interest rate environment. This is the reason investors may hold a diversified investment portfolio including asset classes, less sensitive to immediate interest rate changes.

With the interest rate rises, you may want to consider reviewing any home or business lending. Talk with us today to discuss how the interest rate changes impact your financial situation.

property lending

Tighter lending restrictions on the way

Tighter lending restrictions will be introduced within two months, as announced recently by Federal Treasurer Josh Fyrdenberg. Australia’s financial regulators are expected to restrict the size of new loans, with expectations that borrowing capacity could soon be capped at below six times the borrower’s income.

The changes raise concerns after many borrowers have taken out loans larger than six times the size of their income as property purchasers attempt to keep up with sky-rocketing prices.

It has never been a better time for buyers and investors to take out a loan with interest rates at record lows, however, the focus is on whether borrowers will be able to service this debt once interest rates begin to rise and we move into ‘COVID normal’.

According to the Australian Purdential Regulation Authroity (APRA), high debt-to-income (DTI) ratios are those over six times the applications gross taxable income. Currently, 22% of all new lending applications in the June 2021 quarter were more than six DTI, which is a 50% increase from June 2020, where only 11% of total applications were greater than six DTI.

Statistics show that Australians on average are earning a yearly salary of $83,000 meaning if borrowers were limited to six times their income, they could only borrow just over $500,000.

When looking at the average price of residential properties in Australia, the Domain median national house price is $955,927. The new borrowing cap will mean the average Australian would be priced out of all major capital cities.

It’s expected these DTI limits will impact investors with existing property portfolios and first home buyers trying to maximise their borrowing capacity the most. Although we may see some leniency for first home buyers as the intention behind introducing these DTI limits is to curb speculative investment rather than hamper affordability for first home buyers.

APRA has tightened lending standards twice in the past and on both occasions the property market proceeded to fall 2-8% in the following 12 months, indicating a similar fall in growth may come in 2022.

As a result of the new lending restrictions, it is expected that the local and national housing price growth will slow from 20% in 2021 to 7% in 2022.


If you have any questions regarding the new lending restrictions, or would like assistance securing finance, please give us a call on 03 5434 7690 or email

non-bank lender

Why choose a non-bank lender?

Whether you’re looking to grow or refinance your portfolio, non-bank lenders could be the best choice for your wealth creation journey.

A common misbelief is that non-bank lenders are tied to the strict rules that apply to more traditional finance lenders, but the truth is that non-bank lenders have the same obligations as the more conventional lenders.

Non-bank lenders are able to provide a much more personalised service to customers, often allowing customers to deal directly with the broker as opposed to the support staff at a bank. Non-bank lenders are also more likely to listen to the individual story of every borrower, rather than purely making assumptions as many conventional lenders do.

Many people are surprised to discover that non-bank lenders are very competitive on rates in the investment space and are able to help borrowers when their current lender is not willing to provide finance for them.

Given that speed to market is currently key for property investors looking to pounce on a purchase, conventional lenders are becoming less enticing for borrowers.

In fact, stories of people missing out on a great deal because of lengthy turnaround times are becoming more and more common.

Momentum Intelligence’s Broker Pulse survey for March 2021 found that CBA’s average turnaround for broker-lodged loans was 12.7 days; NAB’s was 9.4 days; Westpac’s was 13.7 days; and ANZ’s was 16.4 days (business days). These are generally the best case scenario for simple applications whereas it can often take twice as long for self-employed applicants.

This is where non-bank lenders can provide a helping hand within a few business days at competitive rates. Endeavor Finance work with a number of non-bank lenders from around the country to secure the best loans for our customers.


If you are after a second opinion or want to know more about the non-bank lenders available, speak to Adam or Llewe at Endeavor Finance. Call 03 5434 7690.

Low interest loan scheme available for SMEs

The Small and Medium Enterprise (SME) Recovery Loan Scheme is designed to support businesses who received the final round of JobKeeper payments. It has also been expanded to assist businesses that were affected by the March 2021 floods and are located in specific disaster zones within New South Wales and Queensland.

Under the Scheme, businesses will have access to low-cost bank loans up to $5 million where the Government guarantee will be 80% of the loan amount. Lenders are able to offer businesses a deferral on repayments for up to 24 months and loan terms can be up to 10 years.

The interest rate on loans will be determined by lenders, however, they will be capped at around 7.5%, with some flexibility for the interest rate on variable rate loans to increase if market interest rates rise over time.

The Scheme is enhancing lenders’ ability to provide cheaper credit, allowing many businesses access to vital funding to help them get through the impacts of COVID-19 and invest for the future.

Eligibility criteria

To be eligible, you must:

  • Have a turnover of less than $250 million and be a recipient of the JobKeeper payment between 4 January 2021 and 28 March 2021, or
  • Have been affected by the March 2021 floods and be locate in eligible Local Government Areas

For a full list of the eligible Local Governments Areas, click here.

Eligible loan uses

Loans issued under the Scheme can be used for a number of business purposes to support investment, including:

  • refinancing existing loans and pre-existing debt
  • purchasing commercial property
  • acquisition of another business.

Uses not permitted with the loan:

  • purchasing residential property
  • purchasing financial property
  • lending to an associated entry
  • leasing, renting, hiring or hire purchases of existing assets that are more than half way through their effective life.

How to apply


All loans backed by the Scheme will be available through participating commercial lenders. We work closely with a number of lenders on our panel to help clients secure funding for their business. If you’d like to discuss or need assistance in obtaining finance, we can help.


For full details on the SME Recovery Loan Scheme click here:


If you have any questions regarding the SME Recovery Loan scheme, please give us a call on 03 5434 7690.