Concerned with rising interest rates? Maybe it's time to refinance your home loan!
2023 INTEREST RATE UPDATE - Borrowers in a precarious position
The latest Interest Rate Update has just been announced by the Reserve Bank of Australia (RBA) on Tuesday, February 7th.
In 2022, Interest Rates became a hot topic and saw a significant change from the all-time lows of 1.89% for home loan rates to the current 5.04%, a massive 282% increase.
This sudden change has left many borrowers in a challenging position, that is exactly why it’s important to stay informed about the latest Interest Rate Updates to make informed financial decisions.
Bad inflation news
This latest interest rate update from the Reserve Bank of Australia (RBA) was heavily influenced by the Consumer Price Index (CPI) figures released in January.
The CPI measures changes in the price of goods and services, and the recent figures indicate a continued increase in the cost of living. In response to rising inflation, the RBA may choose to raise interest rates to curb consumer spending and reduce demand for goods and services.
The primary function of the RBA is to maintain economic stability and control inflation. By increasing interest rates, the RBA aims to discourage borrowing and encourage saving, ultimately slowing down the economy and reducing the rate of inflation. This, in turn, can help stabilize the value of money and maintain economic stability.
However, higher interest rates can also have negative impacts on borrowers, as the cost of borrowing money increases.
Reduced rates last few months
I know mass media are gonna peddle the doom and gloom scenario here, and that’s not necessarily untrue.
But we can zoom out the last few months and look at what banks have been doing with fixed rates.
Banks have been reducing their fixed loans the last few months of last year. This is a relief because it suggests to me that they are not as worried about interest rates rising as steeply as what they were earlier in 2022.
Are we going see the tide turn for interest rates in 2023?
I’m going to offer a personal opinion here.
That is, people focus way too much on the interest rates. Is it a problem? Yes. Can you do anything about it? No.
I talk to people all the time wanting to borrow money. Generally they want to overextend to get into that dream house or try and buy that extra investment.
I would offer that what most people should try and do is just make more money. I get it, that’s not easy, but overextending is a risky way to get what you want.
If you want help in making the right financial decisions or anything home loan related, I’m all ears, just book a chat through the link below. Cheers!
Mortgage Broker - Melbourne, VIC
Will Bell has 15 years’ experience in the finance industry, the last 11 years he has owned and operated Will Bell Mortgage Broker. He specializes in residential home loans and over the years has carved out a trusted brand. This is proven by the reviews his customers have made regarding the service and the experience he has provided.
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