How low can Interest Rates go?

So, here we are. Interest rates have been cut AGAIN! They’re low, so low in fact that there is no precedent to what happens from here. They’ve NEVER been this low.  The cash rate now sits at 1.5%. Wow.

I’m no economist, however what I do know is that we are in unchartered water. How much further can they fall? Will there be a kick-start to the economy that gets things moving again? I don’t know, but perhaps now is the time to pick your chips up, thank the dealer and leave? Or do you sit tight and wait for the dream hand?

Whatever your gambling disposition, it’s clear that now is the perfect time for those with a mortgage to review your situation and make sure you’re still in the right product for your needs. Worst case scenario you stay where you are. Best case scenario you save thousands in mortgage repayments over the life of your loan.

Thousands you say? Maybe you currently have a $300,000, 30-year mortgage with an interest rate of 5%; if you shave 25 basis points from your interest rate, you could save yourself over $16,000 in interest over the life of your loan. I’d take those odds. Without doubt. Chances are that since you took out your mortgage your circumstances have changed, whether that be employment conditions, a growing family unit or you’re paying off the car you had to have. Every $ counts doesn’t it?

Before exploring refinance though, it’s vital you do your research on what options are available to you. Look beyond the interest rate alone. Many borrowers will look to refinance with a lender that spruiks the lowest interest rate, but just because they have the lowest rate doesn’t mean their product is the cheapest loan overall or the most suited to your needs. Different lenders have different fees for different products. Research. Think of the cash you could save.

There is a plethora of loan fees that borrowers may incur. Application fees, monthly account fees, redraw fees, additional repayments fees, rate lock fees and break fees to name but a few. Always look for the Comparison Rate, this will give you a better understanding of the overall cost of a loan.

As a professional mortgage broker, I’m here to research the products out there on your behalf. I’ll do that at no cost to you. How? Well I’m paid by the lender, and it doesn’t matter which one of the 20+ on our panel you go with, I get paid the same no matter what.

To find out whether refinancing is a good option for you and your current needs, contact Mike on 0435 945 419.

Posted in: Interest rates

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