How do low interest rates affect you?

question-markThe Reserve Bank announced last Tuesday that interest rates would remain on hold yet again at the record low rate of 2.5 per cent. But what does this mean for the average Australian?

Low interest rates essentially mean that it’s cheaper to borrow money, allowing consumers a greater access to funds.

This is great news for those who own property or who are about to buy, because low interest rates make paying off a home loan much cheaper.

Over the last 14 months homeowners have been taking advantage of low interest rates and paying off as much of their mortgage as possible, putting many in a good position where they have payed off a huge chunk of their debt and are possibly ready to borrow again.

Just be mindful that you don’t overextend yourself if you are looking to take out a new home loan.

You should always provide yourself with a financial buffer in case interest rates do go up again. If you think that you wouldn’t be able to stretch your budget should interest rates go up, then you should consider a fixed interest rate home loan instead of a variable option.

Interest rates are expected to remain on hold for a while longer though, and while no one knows for sure when the next interest rate rise will be, many predict that it won’t be until well into 2015 or possibly later.

If you have been thinking about buying a new home or an investment property then now is a good time to look at your options and to see what you can afford to borrow. If you have an existing home loan it is also worth chatting to your home loan provider to see if you can get a better deal.

If you’re interested in buying a property in the Bacchus Marsh area then you can find properties for sale on our website