With expectations that the Reserve Bank will continue to increase interest rates given inflationary pressures, now is the time for borrowers to reassess their existing loans.
At the time of borrowing, loans are assessed for serviceability based on interest rates well above the rates we’ve experienced over recent years. The RBA suggests that most households are ahead on mortgage repayments, and have built up significant buffer in their loans, so are relatively well-placed as interest rates start to rise. Whilst economists are prepared for some increase in mortgage stress, a mass sell-off of property is not predicted, nor a sudden crash of property prices.
It is sensible for borrowers to review their loan now, with consideration of total debt levels, the interest rates they are currently paying, whether the loan is fixed or variable, all within the context of the current property market.
Though the majority of fixed rates on offer have already increased to over 4%, fixing a portion of a loan may still be appropriate for some people who are heavily mortgaged with little room to move with cash flow. Fixed rates offer peace of mind and predictability of loan repayments for a period of time.
Variable rates on the other hand are generally under 2.5% currently, though as usual there is some difference between lenders. Now is the time to ensure your variable rate is highly competitive.
I can compare your rates, term and conditions to hundreds of competitive products, and provide you with a free property report for your suburb.
Give me a call on (02) 9908 9888 or email firstname.lastname@example.org for a free ‘Loan Check’. This service is available to all Edney Ryan Group clients.