Dr Philip Lowe, Governor of the RBA, said that while Australia’s inflation has passed its peak, further tightening will keep occurring until the inflation target is met.
High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality.
The coming months expect to see large numbers of Australian borrowers rolling off their record-low fixed-rate mortgages, taken out in 2020. Homeowners could face an increase in repayments by up to 65%.
What does this mean for you?
If you have a variable-rate mortgage, you can expect your monthly repayments to increase in the coming months. However, the extent of the increase will depend on how much your mortgage is worth and how much your interest rate increases.
If you are concerned about the impact of rising interest rates on your finances, you should speak to your mortgage broker or financial advisor. They can help you to understand your options and make sure that you are prepared for the upcoming changes.
What can you do to prepare?
There are a few things you can do to prepare for the upcoming rate hikes:
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Review your budget: Make sure that you are tracking your spending and that you have a clear idea of how much you can afford to repay each month.
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Increase your savings: This will give you a buffer in case your monthly repayments soar.
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Consider refinancing: If you have a fixed-rate mortgage that is coming to an end, you maybe able to refinance to a lower interest rate. However, it is important to shop around and compare different deals before you make a decision.
Speak to a financial advisor today to find out how you can prepare for the upcoming rate hikes.
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