Rate hike a ‘call to action’ on personal finances – broker
This morning’s 0.25 per cent interest rate rise was a “call to action” to homeowners to take control of their finances, according to broker Mortgage Choice.
National manager corporate affairs Warren O’Rourke said the increase by the Federal Reserve Bank (RBA) would force homeowners to be “more vigilant than ever” in controlling their personal finances.
O’Rourke said the rate rise of 0.25 per cent would result in monthly repayments increasing by $37, based on the average Australian owner-occupied home loan of $222,200 repaid at 7 per cent over a 30-year term.
The RBA cited Australia’s 4 per cent inflation rate as a contributing factor in its decision to raise the cash rate by 0.25 per cent.
This is in addition to factors such as underlying inflation increasing to 3 per cent and total credit growth for the first half of 2006 reaching an annualised rate of 16 per cent.
While acknowledging the rate hikes would make it more difficult for homeowners to “make ends meet”, O’Rourke said the increase also represented an “opportune time to reassess their budgets to facilitate smarter spending choices”.
“Australians should consider fixing part, or all, of their property loan if they have a tight budget and want peace of mind on being able to afford repayments for a fixed period.
“As a home loan commonly represents a significant portion of a borrower’s monthly expenses, it is worth them considering whether their current loan is still the most suitable for their lifestyle and financial circumstances,” he said.
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