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3 reliable strategies for staying ahead of mortgage rises

Updated: Jul 19, 2022

Take immediate action and stay ahead of home loan rate rises and financial distress with our top three strategies!

In the last two months, the Reserve Bank of Australia (RBA) have increased their cash rate by 25 and 50 basis points, respectively. Australians are anticipating further cash rate rises in following months. As a direct result, many major lenders are following in the pursuit of the RBA and increasing interest rates. Thus, causing widespread concern for mortgage holders across the country.

Why is the cash rate rising?

For close to two years, the RBA remained committed to improving the conditions of the economy (because of the pandemic). During this time rates were significantly low. With rates being so low for so long, inflation increased within the economy. This cycle is normal for monetary policy. Now that inflation is high, the RBA are increasing their rates to try and bring inflation down, again.

Staying ahead of rate rises

If you’re a mortgage holder, or hold several mortgages, there are a few things that you can do to stay ahead of rate rises. Doing so can help to alleviate mortgage stress during times where rates are expected to continue rising.

Stay calm and reach out to REIF

Yes, first and foremost, stay calm!

The media are instilling fear in the average home loan holder in Australia at this moment. This is something they do very well. Despite this, it’s important to remain neutral when consuming news, especially when topics negatively concern household wealth.

If you’re concerned about how rate rises could impact you, you need to stay calm and reach out to a finance broker like those at Real Estate Investment Finance (REIF). A qualified finance broker can sit with you to assess your individual circumstances. They can then determine how rate rises could impact you. Furthermore, they’ll help you to identify measures that can be taken to eliminate financial stress.

Brokers can help you to identify budgetting resources
Brokers can help you to identify budgetting resources

Budget for rate rises and increase your savings

It’s important to remember that when you initially take out a home loan, your bank will do a serviceability assessment to ensure that you can still meet repayments, even when rates do rise. If they’re not confident in your ability to repay your loan, should rates rise, they’re not likely to give you a loan in the first place.

Off the back of strategy one, you could also benefit from budgeting. When working with a finance broker, they can help you to identify resources which can help you to budget and accommodate for rate rises. You might also benefit from having a buffer in place. A broker can help you to identify if it’s needed.

A buffer could be an additional strategy for increasing your savings. Whether it be allocating separate funds for when rates do rise, getting an additional source of active or passive income, or something else that can help you improve your savings rate. Doing this can help you to stay one step ahead of interest rate rises and support you with comfortably repaying your home loan.

Refinance to a more suitable rate

Finally, when working with a finance broker, they might be able to help you with switching to a more suitable home loan rate. At REIF for instance, we have access to more than 40 banks in Australia. These lenders are comprised of small and major banks who have hundreds of home loan product offerings. The more options that you have access to, regarding your home loan, the better!

Additionally, while major lenders are currently increasing their home loan rates, there are still smaller lenders who are competing for business. Hence, there are still some who are offering lower rates to entice customers to refinance their mortgage with them.

If you’re a homeowner, and concerned about your home loan being too high, reach out to our brokers at REIF. They’ll be able to help you with identifying suitable rates for you and guide you through the refinance process, free of charge.

To book your free finance consultation with an REIF finance broker…

At REIF our brokers work for you, free of charge! If you’re thinking about staying ahead of rate rises, it’s important that you do it now. Reach out on the details below to book your finance consultation.

Ph: 1300 130 932

In the video below, our National Sales Manager explains how you can beat interest rate rises.

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