What’s up with interest rates? Is it time to lock them in?
Recent market events and analyst talk appears to be pointing towards rate rises. What’s behind this?
- Over the past few months lender regulators have been imposing more and more rules and restrictions on home loans, especially investor loans. The result has been that lenders are reviewing the rates on many of the loan facilities and re-pricing many of these – upwards. The biggest upward movements we have seen is in the interest only investor loan segment, but it is flowing into most loans and most lenders.
- Severe caps have been placed on lenders for the growth of investor loans – the result being that some lenders have temporarily left this market, are being selective about the deals that they write, reducing loan to value ratios, or changing their terms to reduce the flows of these types of loans.
- With the new concessions in NSW for first home buyers we are seeing some lenders offering special deals to attract these borrowers – in a changing lending environment these loans are now very attractive to lenders.
- The notes from the last Reserve Bank meeting indicate that the RBA are now taking a positive view to interest rates (this means that they are thinking of lifting the cash rate) and most analysists are now saying that it’s only a matter of time before rates rise.
- Anecdotally we are hearing that over 25% of homes will suffer “mortgage stress” if rates were to move upwards 2%.
What does all this mean? Well, interest rates may well be on the move upwards for the first time in a long time. So now may be the time to close the padlock on your loan and fix your rate – there are some great deals available, especially for 2 and 3 year fixed rates so now is a great time to remove the risk and fix your rate.
The three year rate is possibly a good option – we believe that you should review your loan every three years to make sure that your deal remains as good as it was when you took the loan on, the same as you should review your insurance, your electricity contract, and all your other recurring living expenses.
If interest rates are a concern to you, or you have not reviewed your loan in the last three years now is the time to call us for a financial health check, we don’t charge for a consultation, and you may end up saving thousands of dollars.