If you’ve bought your first home in the past decade or so, you could be forgiven for thinking that the interest rates you’re enjoying now are about where they will always be.
Hannah McQueen, founder of enableMe, has the following advice:
There has been almost a decade of exceptionally low rates, therefore many home owners have come to believe this is normal.
Last year the average two-year fixed rate was about 4.58 per cent, but 10 years ago it was 9.34 per cent.
While they are a long way off returning to those levels, it’s time to ask yourself ‘What would your household budget look like if you were paying those rates?’.
Borrowing costs are starting to rise marginally.
If any portion of your mortgage is floating, you will have noticed those rates creeping up.
But if you have a great fixed rate locked in for many years to come, why should you be worried?
1. Many people have worked out what they can afford to borrow based on these extra-low rates. You need to be sure you can continue to service your mortgage when rates start to rise.
2. This is your chance to get ahead, because borrowing has almost never been cheaper. If you’re not making progress on your mortgage now, you need to get that sorted to make the most of these conditions.
Low interest rates won’t be here forever but while they are, they present an opportunity to get closer to being mortgage free, faster.
Make sure you don’t waste it.