Keep interest rate rises in perspective

The Reserve Bank announced another rate rise of 25 basis points this week with official interest rates now at 3.5%. There seems to be wide spread agreement that rates will continue to rise over the next year or two until more ‘normal’ levels are reached.

It’s important to keep this information in perspective and not panic. Let’s remember that the interest rate levels that we’ve enjoyed this year were deliberately set at record low levels designed to stimulate the economy. They were never going to remain at these levels for the long term.

If you’ve overstretched your finances and are already starting to struggle with this rate rise then you need to address this problem now to work out how you will be able to meet higher repayments. For everyone else, it’s worth making repayments 2% higher than your current interest rate in order to get ahead on the mortgage while building up a buffer that you can fall back on down the track if you need to.

There are still many home owners out there who continue to make repayments on an old loan scheme when there are new and better products in the market place that would reduce their repayments and cut years off their mortgage life. If you haven’t reviewed your loans in the last 12 months then EPS is happy to steer you in the right direction to a reputable finance broker who will be able to help.