Interest Rates – They Just Keep Rising…
Rising interest rates are on everyone’s mind.
But are rising mortgage interest rates something to be scared of?
We thought that we would answer some of the more common questions that the team are being asked.
What is the best thing to do when interest rates rise?
There are 3 things you can do when interest rates go up
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- Pay down (or pay off) credit card or other variable interest debts
- Delay (or re-budget) major purchases, for example, a new car or that house renovation
- Speak to a loan broker today to ensure that you have the best loans in place.
Bottom line: Pay off variable interest rate debt as soon as practically possible. If you can, refinance loans to lock in a set (hopefully lower) rate.
How do you prepare for further interest rate rises?
Clear Your Debts – clear up any credit-card debts and pay down personal loans, including car loans. Also, pay down any debts using funds you might have in low-interest savings accounts.
How long will the interest rates stay high?
Many industry experts believe that within 18 to 24 months rates will be back to a more ‘reasonable level.
Time will tell. The worldwide economy is currently in an unsure place and trying to control inflation and shortages.
We can’t expect interest rates to reduce as low as what we have been seeing in the past few years during the ‘covid’ years.
Who is worse off when interest rates rise?
When interest rates rise, not everyone suffers.
People who need to borrow funds for any purpose are worse off, because financing costs more. Conversely, savers or self-funded retirees earn more revenue because higher interest rates mean more interest on their savings.
The main people who would be worse off are people who have taken out loans, specifically home loans. They will be struggling to deal with an increase in their payments, along with the average housing price trending downwards.
What can you do?
We are here for assistance or any questions you may have such as financial tips ore refinancing. To contact Financially Sorted you can call us on (03) 9888 3175 or email on [email protected]