Immunise Your Loan With Fixed Rates
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Now that interest rates are firmly back on the agenda, there are still some basic misunderstandings in the minds of many borrowers. Most commentators are reminding us that the Reserve Bank is keeping an eye on two things:
1.Wage rises and the associated inflation rise, placing upwards pressure on interest rates.
2.The slowing economy.
The headlines in the newspapers and the hyped comments of some television news reports have their own impact on the public perceptions as to what is going to happen.
Naturally, most borrowers are concerned that a rise in the variable rate will cause them financial hardship.
Most of the enquiries I have received have been about this very point and as a result borrowers are investigating their options as to whether another lender can offer a better rate. Of course I am happy to do this but I always point out the following tips about refinancing.
1.Make sure that the new lender offers an attractive rate that will make the move worthwhile.
2.Check that payout fees from the existing lender do not take away the benefits of refinancing.
3.Examine the ongoing fees and charges that apply to the new loan so you can compare apples with apples.
4.Look at the fixed rate options of the new lender so as to give yourself the best options for the future.
This brings me to my main point, and that is fixed rates.
Before you panic about the prospect of rising rates, look at the fixed rates offered by your current lender. In most cases you will find they are actually lower than the standard variable rate or even the discount variable rate.
In fact is very likely that you will save money and lock yourself into an ongoing cheaper rate.
It’s like an immunisation against rising rates, and you can stop worrying right now!
There are a few other considerations about fixed rates that yo need to be aware of however, like limitations on extra payments, whether redraw facilities apply, and early repayment fees if you want to sell the property or refinance with another lender.
In other words call me so I can provide you with all the figures and information you need so you can plan for your future needs as well as take care of your cash flow now.
Call me on 1300 133 193
Interest Rates to Remain Steady
With petrol prices coming down there is lower inflation so interest rates should remain steady. So say the analysts of the latest economic data.reported in the press today.
Inflation actually fell by 0.1% during the quarter, the first fall in eight years.
The most recent concerns had been bananas and petrol but evene when these were taken out of the equation, inflation rose by just 0.5%.
Some experts are even tipping a rate fall.
“In our view, yes, interest rates have peaked because inflation has peaked,” Commsec’s Craig James said. (The Herald)
The National Australia Bank’s Alan Oster suggested homeowners could sit back, relax and watch for up to a year.
With underlying inflation of around 2.9% it is within the Reserve Bank’s target range, allaying concern that another rate rise could be imminent.
The median price of a Melbourne house was $385,000 — cheaper than Brisbane, Perth, Sydney and Canberra.
Home Loan Interest Rates
It is interesting to watch the experts predict what the Reserve Bank will do with interest rates at its next meeting. About 70% of them agree that there will be no increase. In any case, it’s still a fact that if you are worried about a rise, you can immunise yourself by fixing all or part of your loan.
Some peoples still don’t realise that fixed rates offered by most, if not all, banks are below the standard variable rate. So, there is little need to be as concerned as most people have been.
I have a theory that the real problem is not so much with home loans but credit card debt and personal loans. These cost a lot more than a home loan. Now whist it’s true that home loans are taken out over a longer term there are some interesting points to note about how credit card and personal loan debt impact upon your cash flow.
Look at it like this:
For every $1000 you borrow on a home loan taken out over 30 years at a rate of 8.07% will cost around $7.40 per month.
For every $1000 borrowed on a credit card at 15% over a 5 year term will cost $23.80 per month.
You can easily see where the hurt comes from.
So, it’s a good time to review your home loan to see if you can get a better deal by either fixing it with your current lender, or looking at what’s on offer at another bank.