I have just come back from a Finance Conference at which two of the guest speakers were economists from ANZ Bank and NAB, and they had interesting comments on how they saw interest rates going over the next 12 months.  The NAB economist predicted that the cash rate would increase by 1% over the next 12 months and the ANZ Bank economist predicted that the cash would go up 1.5% over the next 12 months.  These increases do not include any increases by the Banks outside of the Reserve Bank guidelines, which the Banks have indicated may occur.

The average base variable rate is around 6.6% pa, so using the above predictions the average base variable rate in 12 months time could be 7.6% pa to 8.1% pa.  If that happened, what impact would that have on your loan affordability?

The average 3 year fixed rate loan is currently around 7.3% pa, however we have a Bank on our panel of lenders who currently have a 3 year fixed rate of 6.89% pa, with unlimited additional repayments during the fixed rate period, provided the loan is not paid out in full, and also has a redraw facility.

Whether you fix the interest rate or not depends on your individual circumstances and your end goals.

If you would like to discuss your individual circumstances with John, phone the office on 0749722081 or email John at jwhitten@ihl.net.au.