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With much speculation that interest rates have reached their lowest point, mortgage holders are being urged to prepare for the impact of higher interest rates.
Joe Sirianni, Smartline’s executive director, said there is widespread speculation interest rates will soon rise and it’s time for borrowers to start preparing.
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“Recent comments by the RBA indicate the interest rate cut door is still slightly open, but money markets seem to think it’s more likely they won’t cut again,” he said.
“That means we are moving closer to the time when rates will start to rise again, particularly if the economy improves.
“For those who haven’t already, now is the time to perhaps look at locking into a fixed rate and considering other ways of managing higher interest rates,” added Mr Sirianni.
“The long-term average variable rate in Australia is about seven per cent, so fixed rates below five per cent really are attractive for most people," he said.
Mr Sirianni warned those who are considering fixing their interest rate to think carefully about their fixed rate term.
“Generally speaking, it’s probably safer to go with a one-, two- or three-year term,” Mr Sirianni said.
“While fixed rates are available for five-, seven- and even 10-year terms, that is a very long time to be committed and the break fees can be significant, totalling thousands of dollars,” he added.
