Will Interest Rates Rise Again?

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Saturday, 12 June 2004

With the Reserve Bank of Australia increasing interest rates twice already this year many people are wondering will they rise again? For many the increased cost of housing combined with increases in the cost of fuel, is making it more and more difficult to break into the housing market. So what can home owners expect with interest rates?

The reports that we have been hearing indicate that we could see another increase in rates towards the end of the year. How will an increase in interest rates affect you? It is important to prepare for the worst in a rising market. One way to combat an increase in interest rates is with a fixed rate loan. With a fixed rate loan you can choose to fix your interest rate for a period of time. Most people will choose to fix for between 1 and 5 years. If interest rates increase while you are on a fixed rate contract your interest rate and loan commitments will remain the same.

Another way to combat the effects of a rate rise can be to consolidate your debts. You would be surprised at the difference this can make to your monthly loan commitments. Any smaller debts you may have such as credit cards and personal loans are often at a higher rate of interest to loans such as mortgages. Consolidating these debts to a lower interest rate reduces your monthly commitments and frees up your cashflow giving you more money in your pocket.