Hi Property Lovers
I came across this article regarding the outlook of interest rate's and though it was a good read.
Preparation is the vital ingredient for borrowers when it comes to potential interest rate rises, according to Mortgage Choice.
The mortgage broker's senior corporate affairs manager, Kristy Sheppard, suggests the Reserve Bank of Australia will increase the cash rate in the not-too-distant future and she says banks have shown they're willing to move rates up independently of that.
"Looking at important economic factors such as growing housing finance demand, increasing housing values, unemployment not rising to the extent predicted so far, retail sales moving along at a decent pace, underlying inflation outside the target range and improving consumer sentiment, I wouldn't be surprised if the cash rate increased before the end of this year."
"I'll be surprised if the cash rate hasn't risen by the end of the March 2010 quarter."
In order to prepare for potential rate rises, Sheppard says it's firstly a good idea to repay your mortgage at a higher than necessary level and make as many extra payments as possible.
"That will provide you with a financial buffer should you find it challenging to incorporate rate rises into your budget at some point in the future."
"Second, look at restructuring your loan to incorporate, say, an offset account or other feature that may help make a positive difference to the loan amount."
It's also important to compare your loan to a wide range of other mortgages to make sure there isn't a better one out there that can save you money and provide you with better features, according to Sheppard.
This information was gathered from Australian Property Inspector:
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