How To Prepare For A Possible Interest Rate Increase in 2022

Interest Rate Increase 2022 Launch Finance

The number one talking point in home loans today is whether the variable interest rates will rise in 2022. The Reserve Bank has confirmed they will, however there has been no indication of when in the year this will occur.

So, what can you do to prepare for an interest rate rise?

Firstly, you should note that most people with a home loan have already prepared for a rate increase. When applying for a home loan, the assessment of what you can borrow with the bank has been checked between 2% – 3% higher than your actual home loan interest rate at the time of applying for your loan.

Secondly, most people would have reviewed their monthly budget to confirm what they spend per month on fixed costs and discretionary spending.

Below are some things you can do in advance to see how the potential increase will effect your monthly budget.

  • There is a loan repayment calculator on our website. Calculate your loan repayment by using the limit (balance + redraw) of your home loan and using an interest rate increase of 0.25%, 0.50%, 0.75% and 1% higher than what your current interest rate is. This will give you a guide of what your loan repayment will be in the future.
  • Factor in the higher repayment now and try and pay the higher repayment so you start getting ahead on your home loan.
  • Review your monthly budget and see where you can make some saving. If you can, put some additional savings away to help with the future increase.
  • If you are on a variable rate, contact your Launch Finance Broker to see if you can get a further discount on the interest rate. This is also a great time to review your financial goals with your broker to see if a fixed rate will work for you.

Remember; everyone’s financial position is unique. There is not one solution for everyone. Make sure to contact us and we can help you plan for the future.