Interest Rates,Going up or down?

By Navjeet Singh Matta, ASIC Licensed Mortgage Broker also Director- Gain Home Loans (Full member MFAA) Dear friends,

Only four months to go before 2011 ends and there has been no interest rate movement all this year; up or down. Just a few months back, most of the economists were predicting two interest rate rises by Christmas and currently the prediction is that the rates will actually go down in the first quarter of 2012. But don’t get excited yet, the Reserve Bank of Australia (RBA) may have other thoughts! You see the rate movement depends on lot of factors; one of them is inflation and the other is employment levels. The inflation rate have been a fraction above what RBA target is and it’s governor Mr. Stevens has made several statements warning people they should not get influenced too much as the rates may not go down in near future. Last few weeks have seen deteriorating economic conditions in US and the Europe. The share markets have been highly volatile both here in Australia and the rest of the world giving us a scare of another Global Financial Crisis and therefore most economists are predicting a rate-cut. We in Australia have got a two-speed economy; on one hand we have the mining boom and on the other hand the retail and the service industries are not doing that well. These industries recently made a plea to the RBA governor to recognise their problems and reduce the cash rate. Lot of my clients also wonder why they have to pay such high rates when their salaries have not gone up by that much. As you know we have our base in NSW and the mining boom is mostly happening in Western Australia and Queensland where the salaries have touched the roof and those people are mostly happy with the interest rates as the incomes they have are enough not only to give them a comfortable life-style but also negotiate their mortgage repayments. How seriously this request is taken by RBA, that only time will tell!

Should you fix your mortgage now ?

This is the most asked question these days. After several years, the fixed rates have become too lucrative compared to variable rates. At the time of writing of this article, the best 3 year fixed rate in the market is 6.39% compared to the cheapest variable rate of 6.80% and therefore we all need to seriously think whether to fix our mortgages or not. While taking this decision, lot of factors come in to play. When one fixes their loan, they enter in to a contract with the bank for that period; the repayments don’t change for that part so you know exactly how much you are paying without having to worry about rates going up however on the other side there are a few restrictions which are there. For example, you are not allowed to make extra repayments more than a specific amount, if you do make extra repayments, you cannot redraw and most importantly, if you want to move your loan to another institution (or sell your property), there could be huge break-costs, so one should be very clear about the future in this scenario however if you do decide to fix your mortgage, don’t fix the whole lot, go for fifty-fifty or any other proportion you think is appropriate, if you are un-sure give me a call and I can help you decide. My contact number is 02 9676 3417 or 0412 452 429, or just visit our web-site at www.gainhomeloans.com.au and leave your details at “contact us” page.

Do you have the best rate on your home loan ?

In my previous articles, I have outlined the fact that the lenders these days are offering better deals for new customers and if your current lender is not offering you the rate you want, then leave this to us and we will try our best to get the lowest rate for you along with structuring your loan so that you are able to pay-off your home loan in less time, our services are absolutely free. We also provide free RP Data property reports, so if you are interested in a new property, or want to know the value of your own property, visit our web-site and order a free report today This is a twenty page report with lots of information about the suburb, historical data and more. Contact us at GAIN HOME LOANS ,Lvl 1, 15 Flushcombe Rd, Blacktown, visit our Website or call us 7 days a week on 02 9676 3417 or 0412 452 429.

Disclaimer: Any advice given in this article does not take into account the personal needs and objectives or financial situation of the reader. The reader should consider the appropriateness of this and seek professional advice before making a decision whether to acquire or continue the products and services mentioned.