Upward Shift in Home Loan Rates Has Started!

For those of us old enough to remember the disturbing days of 18% interest rates for home loans in the early 1990's, the consistently low interest rates we have enjoyed since late 2008 has felt like a bit of a home loan holiday! Of course, in that time we have seen pretty major increases in home values, especially over the last 5 years or so. Not to mention a cultural change in our everyday standards, with people now opting for a level of luxury in their everyday lives that past generations would have been horrified by! With larger, more expensive homes, big screen tv's, multi car households, and overseas travel now so readily accessible, a lot of Australians now have much larger mortgages than they have in the past.

What this means is that despite our very low cash rate and therefore interest rates, there are a high number of households that would not need much of an increase in interest rates to start experiencing mortgage stress.

Many industry experts and economists are predicting that the next movement in the RBA Cash Rate will be upward, and in what seems to be a pre-cursor, this week has seen some banks increase their variable interest rates slightly. At the same time, many have lowered their fixed interest rates. For example, ING are offering a fixed rates as low as 3.59%.

So it would seem that if you feel that even a small increase in interest rates will adversely affect your ability to meet your commitments, now might be the best time to look at your options - including fixing your interest rate.

Another option is moving from a major bank to an alternative lender or smaller bank. In order to capture more market share, these lenders often offer more attractive deals to win your business.

There are many options available to give you peace of mind in an uncertain market and we are happy to discuss these with you - that's what we are here for.

If this story has got you thinking, maybe sit down and have a chat with your partner, and really think about how you would fare with an interest rate increase, and whether now is the time to start planning for some long term stability.