There is a lot of uncertainty at present around interest rates and what the RBA is planning to do given the current economic climate. Some economists would say that we are now much more likely to see rising interest rates as recently the US Fed cash rate for the first time in 18 years surpassed the RBA cash rate.
However, others question whether the RBA will increase interest rates considering there are already signals of an economic slowdown, especially in the residential property market.
Nevertheless, current fixed interest rates on offer are not far off all time record lows (early FY17) and it would be safe to assume that it’s only going up from here. The Sydney Morning Herald released an article last week titled “Now is the time to fix” where financial adviser and stockbroker Nicole Pedersen-McKinnon’s explained why she believes rates are going to increase. In fact, many believe that if there wasn’t a Royal Commission investigation into banking conduct currently underway, then we would have already seen an interest rate rise from the major banks, independent of the RBA, as the bank bill swap rate (BBSW) has already increased by approximately 0.30-0.40% in the past 3-9 months.
We are encouraging our clients to at the very least limit their risk and exposure to interest rate rises by simply fixing in a portion of their debt, usually around 50% is ideal, however this would depend on your individual circumstances and financial position.
Did you know that in the last financial year there have been significantly more increases than decreases in owner occupied mortgages, across all fixed terms? Don’t wait for further increases, speak to one of our trusted brokers about fixing in your interest now!