Interest Rates
Affect everyone differently With so much focus on how rate cuts affect mortgages, this article discusses the impact of the low interest rate environment on homeowners,
While interest rates remain at historically low levels in many parts of the world, including Australia, thousands of mortgage holders have enjoyed lower repayments; but interest rate movements mean different things to different people.
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Investors: Whether your preference is shares, property or another asset class, this may be a good time to consider starting a long-term growth strategy. Given that dividend yields and rents may have Aside from mortgages, low interest rates have a changed in the past couple of years, it's worth anmuch broader application—they also flow through other look to determine if potential investments are into personal and investment loans, credit cards and likely to be positively or negatively geared. various types of business financing. On the flip side, Business owners: Overdrafts, car leasing and other investors have seen returns on interest-bearing business loans may need a good review. In particubank accounts and term deposits follow suit and lar, any strategy to reduce your debt should be reunderstandably do not celebrate with every rate visited. You could take advantage of lower interest cut. offers with another lender, but make sure you balAcross the economy generally, a low interest rate ance the potential savings against any costs associenvironment often goes hand-in-hand with slower ated with moving your business to a new bank. economic growth, uncertain job prospects and lowDeposit holders: Dwindling returns on cash may er asset prices. make you feel like there would be little difference if So, depending on which category you fit into, here you put it under the mattress. There's bound to be are a few implications worth considering in your plenty of apparent alternatives to give your returns approach to dealing with interest rates: a boost but it's critical to read the fine print and understand what you're investing in. The adage of Homeowners: With variable rates remaining low do higher returns meaning higher risk holds true, so you use this as an opportunity to build a buffer first make sure your ability to manage that risk is against rates when they eventually turn around? Or properly addressed. are there other more pressing items that your spare cash could be directed towards, such as credit cards Interest rates will not stay low forever – and this will or a car loan? Another issue to consider is your fube good for some and not others. Now is a great ture housing preference. If you would like to renotime to think about how you can use the current vate or upgrade your home, is now a good time to situation to your advantage. do this with prices generally stable and tradesmen
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INFO: James Smith and Hammock Financial Group Pty Ltd ABN 88 150 832 232 are Authorised Representatives of AMP Financial Planning Pty Limited . Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. If you decide to purchase or vary a financial product, your financial planner, our practice, AMP Financial Planning Pty Ltd and other companies within the AMP group will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. You can ask us for more details.
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