1. What do I do about interest rate rises?
Well as we're all aware interest rates have been on the rise and the professionals all have their opinions as to what will happen over the next 6 to 12 months. Some say they will go up and others say they will drop.
The reality is we have an inflation issue to deal with and the reserve bank is on a mission to control spending and reduce inflation.
It is important to note we have a strong economy and low unemployment so fundamentally the country is in great shape. This however doesn't help your current loan repayments and financial commitments.
From everything I have read and studied, my personal opinion is we will more than likely have another .25% rise later this year. Then possibly one more and then that may be it. So what can we do right now with managing interest rate rises to create some peace of mind?
1. It's important to understand your exact current financial position. So a good review of your income and expenses on a consistent basis is always a must!
2. If you don't have a budget (profit plan as I like to call it), this would be a good time to develop one so you can have an accurate idea of what's coming in and going out. I have attached a basic profit plan / budgeting tool to assist in this area.
3. A great saying from Robert Kiosaki - "if you're in a hole stop digging"! So if you don't have the cash for some of the luxury items such as beer, wine, cigarettes, phone calls, magazines this would be the time to make sure you have money for the most important expenses, being your loan repayments.
4. If you feel your interest rate can be reduced this may be time for an assessment of your loans and look at refinancing into a more competitive loan product. Now I am not advocating that refinancing is always the best solution as exit costs and new establishment costs can sometimes kill the positive affect of changing to a new lender and lower rate. So a full assessment of your loan position is advisable.
5. Looking at all the ways you can make extra cash to help you through these times of higher interest rates is a good idea. Focusing on where you can take action action action!
o Can you increase sales in your business?
o Can you take on some extra duties in your work for extra funds?
o Are there some others ways you can generate extra cash?
6. You may have some investments that have done well and it may be time to sell and take some profits. This will be dependant on where property is situated and you need to approach this carefully as generally in times of rising interest rates properties will sell at a lower price. Speak to your financial planner, accountant before making any decisions.
7. I think media has a lot to answer for the state of fear they can create in the community. So work to maintain a good positive attitude by staying healthy, exercising, talk about good positive topics and stay away from discussion of doom and gloom.
8. I always like to read good positive books such as "The Power of Positive Thinking", "Feel the Fear and D o it Anyway" "Who Stole my Cheese" and the "Power of Now" is worth a read to keep you focused and in a good frame of mind. You can pick them up for less than $15 in a second hand book shop.
2. What are the real current interest rates?
I have been getting a lot of questions about interest rates so I just want to give you an idea of what is on offer in the market at the moment.
This can be helpful if you are thinking of refinancing so you can determine what type of savings you would be getting at a new interest rate. Note: Rates and package discounted rates are relevant to specific borrowing amounts and your particular needs and they would need to be assessed fully before determining if you are eligible for any specific rates.
You may have the odd independent lenders offering special lower rates. My objective here is to give you a general guide only, so you have an understanding of the current rate climate we are operating in.
As of March 2008 - rates may have move slightly as its hard to keep up with all lenders at the moment Lender | Standard variable rate | Package discount rate | Fixed 3 years | Package discount rate | CBA | 9.32% | 8.62% | 8.95% | 8.80% | Westpac | 9.27% | 8.57% | 8.89% | 8.89% | AMP | 9.32% | 8.67% | 8.89% | 8.67% | St George | 9.37% | 8.67% | 8.85% | 8.85% | NAB | 9.27% | 9.27% | 8.85% | 8.85% |
3. Talk to us - we are here to help you
For all your home and investment loans, leasing and chattel mortgage needs. Please don't hesitate to give me a call and have a chat if you have any questions or concerns about your loans. I've had a number of clients who have experienced some financial difficulties and have needed help. Through a combination of embarrassment and desperation they have gone to either the lender we have put them with, or to another broker / financial planner to fix their concerns.
From these actions they have on occasion been put into in-appropriate products through unnecessarily refinancing into other lenders and paid exit and entry fees that did not need to be paid.
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