February 07, 2022 by Marvin Coleman
You've got to love the "slow and steady" nature of economists. The RBA Governor last week said a cash rate rise this year is "plausible". That is not exactly going out on a limb; many lenders have already lifted especially fixed interest rates.
Governor Lowe's buzzword was "uncertainty" - there are too many factors at play to predict if, when and by how much interest rates may rise in the next two years. That said, the market consensus is that they will rise.
More about home loan interest rates and what you can do about them in my monthly vlog.
So what should you do about it?
The prudent approach would be to work higher cost expectations from inflation and rising mortgage interest repayments into your financial plans for the next two years. Try to create a buffer for these rising household costs.
Use my Home Loan Repayment Calculator to understand what your mortgage repayment would be if your interest rate was 5%. You could set a personal goal to start saving the difference between that figure and your current repayment. If we're lucky, rates don't go that high and you've created a nice nest egg in the meantime!
If you prefer rate and repayment certainty, you could lock part or all of your mortgage into a fixed rate deal for 1, 2 or 3 years. Just give me a call, we can help you get this done.
The full RBA cash rate hold at 0.1% reasoning is here.
As ever, please call if you need any help.
Best, Marvin
