For the 14th month running, the Reserve Bank of Australia has left the official cash rate at 2.5% for the month of October 2014, this being the most stable the cash rate has been in Australia for more than 10 years. Looking back in time to just over 6 years ago in August 2008, the official cash rate was sitting at 7.25%, and a massive 4.75% higher than the current level.
In looking forward, a survey was recently conducted by experts at Finder.com.au, drawing in 28 experts from accross the country, including Economists Michael Blythe from Commonwealth Bank, Savanth Sebastian from CommSec, Paul Bloxham from HSBC, Janu Chan from St. George and Michael Witts from ING Direct, to understand the anticipated direction of interest rates in the next year. The consensus was all of the experts are betting on a cash rate rise next year, with an average forecast of June 2015. Notable also, that all had correctly anticipated that the Reserve Bank would leave cash rates on hold for October, as they have.
Given that for most of us, our home and our home loan, are our biggest investment and biggest expense every month, it is important to understand how you are managing your home loan, what your priorities are (set and forget, or focus on paying it down, or a bit of both?), and what an increase in interest rates could mean for you and your family. Thinking about it, we all consciously have house and building insurance to protect our homes in case of emergency, yet If interest rates were to increase, what is the impact going to be to your cash flow and your lifestyle and the ability to protect your asset? How can you protect yourself and your home, or understand the likely implications, to have a plan and contingency in place?
Is it time to be proactive instead of reactive in understanding what the implications would be, and setting a plan in place to manage the anticipated changes? Absolutely!
At Get Smart, we have the expertise, skills and resources to analyse your cash flow for you, we want to understand what is important to you, and make sure that your home loan compliments your life, rather than controls or consumes it. It really is easy, and brings so much peace of mind, for so very little cost in comparison to the reactive scenario.
Want to understand more? Contact us, we want to see you succeed as much as you do, and we have the know how to make it happen!
Rachael Bland – Founder & CEO