Rates are rising so what does this mean, well really very little, read on.....

Yes Interest Rates are rising

As you may know this, but I wanted to point out to you again that banks have what is called Stress Test Interest Rates to make sure that when you borrow funds that you can afford repayments if rates increase, it’s called the RLA or Responsible Lending Act which they must comply with.

But they aren’t applied at the rate you might see advertised. Sometimes they are twice that. They’re designed so that increases in home loan rates, do not leave large numbers of people unable to pay their mortgages.

Current stress test rates range anywhere from 3.49% to 6.85%

While the 3.49 per cent rate might look like an easy target for applications, the banks using lower rates usually also used a higher expenses calculation and required borrowers to have more money set aside for bills than the others did. That means it could be just as hard to get a loan across the line.

The bank assumed that some of those expenses would be cut if repayments rose, allowing the borrower to continue to service the loan.

All this means that while you might baulk at the idea of your home loan payments becoming more expensive, the bank has already checked that you can cope with it – either with slack that is in your budget already, or the cuts you can make to your spending.

Many economists and analysts now predict the official cash rate will rise to 1 per cent by February and will hit 1.5 per cent to 2 per cent in the next year or so, I personally don’t think that will happen.

According to Reserve Bank data, the last time the official cash rate was at 1.5 per cent, in May and June 2019, the average new one-year rate was 4.6 per cent, compared to 3.7 per cent last month.

A $375,000 loan with a 4.6 per cent interest rate would cost $486 a week over 25 years, compared to $442 a week at 3.7 per cent. What is for sure is that its never ever cheaper to buy today, be in charge of your own destiny, ask me today, Simple Fast Approved!

Get Pre-Approved so that you can go shopping with confidence as you know what you can borrow so that when the right home comes along you can make an offer.

So give me a call 0275260007 or email me click and lets make a plan for you….its a free service…Mortgage Group, Simple Fast Approved.

THERE HAS NEVER BEEN A BETTER TIME TO BUY YOUR FIRST HOME. WITH TODAY'S LOW INTEREST RATES,  AND BANKS WILLINGNESS TO LEND.

So give me a call 0275260007 or email me click and lets make a plan for you….its a free service…Mortgage Group, Simple Fast Approved.

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