It's HAPPENING!!!!

So last week saw Westpac raise their variable home loan rate by 14 basis points. With yesterday seeing ANZ and CBA following through with rate rises of their own - 16 and 15 bp respectively. While there is a lot of discussion as to WHY this decision has been taken, what actually matters to the real people who have to pay their mortgage every month is the fact that the decision HAS been taken!

Will other banks follow? Unfortunately, it is likely.

WHAT DOES THIS MEAN TO YOU ?

Well, if you have a $500,000 mortgage and you are with a bank that is raising their rates by .14%, that is an extra $58.34 per month in additional interest! This amount in itself will not necessarily break the bank, or add to much financial stress for most families. The increase is, however, an indicator of further potential interest rate rises – especially given the reasons cited by Westpac for raising interest rates (increasing lending costs for the bank, as they source their money from a recovering global marketplace, and their interest rates have increased – so the cost of funds sourced by Australian banks has also increased).

Interest rate increases have only been for variable rates at this time – fixed interest rates have remained the same and still offer very good value.

FIXING YOUR INTEREST RATE

With this in mind, now is the time to have a good long think about how it would impact your home finances if interest rates continue to climb. If you think that an increase in your home loan repayments would negatively impact your ability to meet your commitments, then fixing your home loan rate is an excellent option for you. It gives you the ability to have confidence in what you will be paying for the next 2, 3 or 5 years. In times of uncertainty, fixed rates are a very good option for many people.

Now is the time to act if you are concerned in any. Give us a call to discuss your home loan and the whether fixing your home loan is the best option for you.