Homeowners and investors urged to prepare for rate rises now

While most economists are predicting that interest rates will remain low for the remainder of 2014, it is also widely believed that rates will be heading north sometime in 2015, possibly by as much as 1% or more.

If you have a home loan or investment property now is a good time to start preparing for higher rates, especially if you are already struggling to pay bills.

Homeowners paying back a $300,000 mortgage at the market's average current standard variable interest rate of 5.29% today would be up for an extra $181 a month if rates were to rise by 1%.

Borrowers who are looking to protect themselves from future rate rises in the short term should consider looking at fixing part or all of their home loan or start making higher monthly repayments to get ahead on payments.

Mozo's rate chasers have reported on the fixed rate war for several months with many 1, 2 & 3 year loans now available for under 5 per cent interest, including loans from the Big 4 Banks.

The best 1 year fixed rate is from IMB at 3.99%, 2 year fixed from eMoney at 4.65% and the Best 3 year fixed rate is 4.49% from Teachers Mutual Bank. All Big 4 have 2 year fixed packaged loans available at 4.84%. Head to Mozo to compare fixed rate home loans.