Rates Have Risen Again. What Should You Do Now?
The Reserve Bank of Australia (RBA) has increased the cash rate by 0.25%, taking it to 4.85%. For homeowners with a variable-rate mortgage, this may mean another increase in repayments once lenders pass on the change.
Start With Your Current Loan
While another rate rise is never welcome news, it is a good opportunity to take a closer look at your home loan and make sure it is still working for you.
Check the rate you are currently paying and any changes your lender has announced. If your loan is variable, your repayments may increase, while fixed-rate loans will generally remain unchanged until the fixed period ends. It may also be worth asking your lender whether a better rate or discount is available.
Review Your Household Budget
If your repayments are increasing, consider the effect on your household cash flow. Even relatively small increases can add up over time, so review your regular expenses, subscriptions and other commitments to see where you may have some flexibility.
If possible, maintaining an emergency buffer can also help protect against further rate increases or unexpected expenses.
Could Refinancing Help?
If your current loan is no longer competitive, refinancing may be worth considering. A lower interest rate could reduce your repayments and interest costs, but the interest rate is not the only consideration. Loan fees, discharge costs, fixed-rate break costs, loan features and the remaining loan term should all be considered before deciding whether refinancing will leave you better off overall.
Planning to Buy?
If you are considering buying your first home, upgrading or purchasing an investment property, higher interest rates may affect how much you can borrow.
If you received a borrowing estimate or pre-approval before the latest rate increase, it may be worth having the numbers reviewed before making any major decisions. You do not need to wait until repayments become difficult to review your loan. A home loan review can help you understand whether your current loan remains competitive and whether other options may better suit your circumstances.
If you would like to review your current home loan or explore your lending options, contact the team at Provide Finance.