Start considering interest rate hikes now: Smartline

With rates still currently at record lows, and predictions being made as to when we may start to see them rise, it's time to consider the affect of a rise, according to Smartline Personal Mortgage Advisers.

The impact of interest rate rises on household finances, and the actions that can be taken to manage the impacts, should be at the forefront of all mortgage holders' minds, said Smartline's executive director, Joe Sirianni.

"Interest rates are at historic lows and there is widespread speculation as to where they will go from here,” said Sirianni.

"Recent comments by the RBA indicate that the interest rate cut door is still slightly open, but money markets seem to think that it’s more likely that they won’t cut again," he said.

"That means we are moving closer to the time when rates will start to rise again, particularly if the economy improves. For those who haven’t already, now is the time to perhaps look at locking into a fixed rate and considering other ways of managing higher interest rates.”

AMP Capital's Shane Oliver also said that this week, with a speech from Reserve Bank governor, Glenn Stevens, to be released, it's time to watch closely for clues regarding the outlook.

"Given the confidence Deputy Governor Lowe recently expressed in the economic outlook, it’s likely that Governor Stevens will signal a degree of comfort with current interest rate settings – assuming he offers any comments on current economic conditions," Oliver said.

Currently, when assessing an application for a loan, banks factor in a potential 1.5% to 2.0% on top of the current rate, to ensure the applicant can afford an increase.

Sirianni recommends mortgage holders also consider the following:

·    Consider fixing part or all of your home loan

·    Don’t forget the rate lock

·    Carefully consider your fixed rate term

·    Get into the habit of making higher repayments

·    Understand your spending patterns

·    Get good advice