Low Rates Chance To Create Safety Net: Loan Market
A return to near historical low interest rates provides mortgage holders with the chance to create a safety net for the future, says leading mortgage broker Loan Market.
Loan Market Melbourne broker Josh Gilbert said the current lending environment offered more certainty for borrowers and an opportunity to put measures in place for when rates inevitably go back up.
“Official interest rates are down to 3.25 per cent and there are forecasts of the Reserve Bank of Australia (RBA) taking rates even lower in response to a weaker global and domestic economic outlook,” Mr Gilbert said.
“With variable interest rates from lenders decreasing as well as short and long term fixed rates at appealing levels of under 6.0 per cent, borrowers are in a more comfortable situation.
“In turn, lenders’ assessment rates are also being lowered which is boosting borrowing capacity for home buyers.”
Mr Gilbert said the favorable borrowing conditions also enabled mortgage holders to boost their repayments and reduce the principal on their home loan.
“This is a golden opportunity for borrowers to create a safety net or a rainy day fund,” he said.
“Borrowers will have confidence that interest rates will be stable for the foreseeable future.
“Mortgage holders can make the most of this by setting up an offset account or making extra repayments of $10 or $20 a week, which can help reduce your home loan by years and potentially save you tens of thousands of dollars.
“Should interest rates increase again you will also have the capacity to redraw those extra funds paid into your safety net if the need arises.”