Following on from our article in March when we reviewed the interest rates graphs over the last 20 years, there has now been movement from the RBA on the cash rate and that is upwards! For the first time in 11 years, the RBA has increased the cash target rate to 0.35 per cent, when it was previously 0.10 per cent.

This will affect you if you have a variable rate mortgage. For example, if you have a mortgage of $500,000, this interest rates rise will increase your monthly repayments by $68.

It will also affect you if you are currently looking at mortgage options such as first time buyers, homeowners wanting to refinance or for investment properties.

The big four banks – Commonwealth Bank, ANZ, Westpac and NAB –  have already raised their variable mortgage rates by 0.25 per cent following the rate increase.

Unfortunately, even though the banks have increased the rates once, it won’t stop them from continuing to increase the rates as it becomes more likely that the cash rate will increase further.

Andrew Dalton from Taxpro Mortgage and Finance said: “With the recent decision from the RBA to lift rates by 0.25%, the main lenders are starting to adjust their rates upwards similarly. With the cost of living rising, finding the extra cash to make your home loan repayments could be tough, especially if you haven’t reviewed what your current lender’s rate is. People who have had fixed rates in the past are particularly prone to having their rate adjusted upwards after their fixed period has ended, with a host of lenders only offering their best rates to brand new customers.”

Act now

For homeowners, review what you are paying out in repayments now and what this rate increase will mean to your monthly outgoings. If there is a better option on the market, then consider refinancing while the rate is still low. If you are on a fixed rate, check when that ends and have a plan in place to shop around.

For first time buyers, lenders will be offering their best rates to you, so take this opportunity to review the market and find the right mortgage to suit your personal circumstances. It is likely that fixed rate mortgages will become more expensive in the future, so it’s a great opportunity to lock in good interest rates now, so you have the peace of mind of knowing what you will be paying over the next  2, 3, 4 or 5 years.

If you’re feeling the pinch (or even just looking for a better deal), Andrew will be happy to help explore your options.

Please get in touch on 08 9240 7629 or email: andrew@taxproaustralia.com.au

 

 

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