Do you know what home loan rate you are paying?
According to a recent ‘Mortgage Choice’ survey conducted in May 2022, 55% of home owners with mortgages didn’t know what interest rate they were paying on the related loan. There were 1000 people surveyed. This highlights concerns over affordability as we have now entered an environment of what appears to be a number of potential interest rate rises to curb inflation. The current cash rate in Australia as at 7/6/22 was just 0.85% and some economists are forecasting that to be 1.75% by December this year, and increasing further to say 2.25% by mid 2023.
So assuming a $500,000 mortgage is on a variable interest rate at say 2.50%, here’s how that change looks:-
Loan amount $500000 $500000
Loan term 30 years 30 years
Variable rate 2.50% 4.40%
Monthly repayment $1976 $2504
Loan commitment increases by $528 per month!
Can you find that extra $528 per month and if so what will you be sacrificing?
The fixed interest rate loan market has already moved up forecasting where interest rates will be over the next 1-5 years. So fixed rates may not be an option. However, if you reset your current interest rate it will at least place you back at a starting point where we are now, still at a position where we have relatively low variable home loan rates.
The home loan market is complicated in the sense of the number of products available, knowing where to start , and who can help you with this? The main thing to point out is where you have debt obligations your budget need to be monitored and maintained in a climate of rising interest rates. That’s where we can assist. Please contact Michael Clarke on 02 65832211.