The first thing most of my clients, new and existing ask me is what is happening with interest rates? This is not an easy question to answer and an answer that I would like myself as a mortgage holder. Here is a summary of what happened this year –
The official cash rate began the year at 4.25%. Rates remained unchanged in February, March and April.
In May 2012 the Cash rate was dropped by 50 basis points, followed by a further 25 basis points in June.
July, August & September rates remained unchanged. October saw a cut of 25 basis points. November no change and a final cut of 25 basis points in December 2012 just in time for Christmas.
The official cash rate closed the year at 3.0%
If we take a glimpse back to 2008 the year started with a cash rate of 7%.
History is certainly something we should learn from. Rates are historically low and mortgage holders need to be reviewing their current offering. Questions you should be asking yourself at the start of 2013 –
- Do I know what interest rate I am currently paying?
- Do interest rates fluctuations have a significant impact on my household budget?
- Do I have significant personal debt that I am paying high interest rates on that could consolidate into my home loan
- How long is it going to take to pay my home loan off?
- What are the current fees that I am paying?
A concerning trend from lenders is the lack of consistency in rate decreases in line with the RBA. Lenders are dropping rates less than the RBA and are taking longer and longer to pass on the cuts. The only power that consumers have to change this is to reject loyality and seek the best option for you. Your mortgage should be reviewed in general every 3 years.
Take control of your financial situation in 2013 – A prosperous year to all.