Interest rates in 1960s time warp

Mozo

Tuesday 10 March 2009

With Reserve Bank interest rates at their lowest level since 1964, many Australians are mulling over switching from a fixed to a variable home loan, overpaying on their mortgage to go debt-free more quickly, or even investing in additional property.

But whatever option people go for, Adelaide Now warns against making any rash decisions and encourages people to speak to their bank before signing up for a new low-interest home loan.

"Stay in regular contact with your bank … to ensure you are managing your finances in the best possible way," advises BankSA general manager Chris Ward.

Meanwhile, fellow home loans expert Miriam Agnos, a mortgage adviser at Smartline North Adelaide, said that the Reserve Bank’s interest rate cuts have proved particularly useful for first-home buyers, with property becoming more affordable while lending gets cheaper.

However, she warns that "this situation will only last for a finite period", adding that it is vital to have a contingency plan in place to deal with higher interest rates.

The RBA decided not to cut interest rates this month, the first time it has done so since September.

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