Increases in Fixed Interest Rates are on the Rise
The rumours are true, increases in fixed interest rates are on the rise and knocking at the door. With the increasingly challenging environment of the market, these changes may make a difference not only in the coming year but beyond, especially for home loans.
Quick Rises on the Horizon
Interest rates have been incredibly low over recent years, but almost everyone is sure a rise in interest is coming. The Reserve Bank of Australia set an all-time low cash rate of 1.5 percent in August, but increases are already predicted.
The National Australian Bank increased its variable rates by 0.15 percent on 12 December for new and existing residential investor home loans, raising the rate to 5.55 percent. Westpac is likewise expected to increase rates even further. Interest-only mortgages are projected to rise by 0.08 to 5.41 percent while interest-only products will rise by 0.08 to 5.68 percent. Equity access loan rates will rise even higher, up to 5.80 percent.
Increases Will Influence a Move Up
These increases will continue to drive fixed interests rates up. Consumers will likely feel the impact immediately because of the sharp rise, and they will also feel it in the long run. Although the US Treasury benchmarks only directly change rates in the United States, the influence stretches worldwide. Recent projection of increases up to 3.00 percent by 2020 will likely drive up fixed interest rates in Australia and other countries as well for the coming years.
Home Loan Interest Rates Increasing the Most
Home loans are where the money will really go. Business Insider Australia reports a 53 point rise already in three-year swap rates-from 1.53 to 2.06 percent. Fixed rates for 2 to 5 years have also risen 0.15 to 0.60 percent, respectively. Because increased rates for home loans are expected to continue rising, potential homeowners need to lock in their rates now. For those who already have a home loan but are looking to refinance, time is of the essence.
The financial landscape is changing. Securing a fixed rate home loan now will help consumers avoid rising rates and an uncertain future.