State of the Market

There has not been an interest rate rise since November 2010 when the RBA raised its cash rate from 4.5% to 4.75%. At the time, average variable home loan rates were 7.5% and three-year fixed rates were 7.34%.

These were considered the long-term average rates, however, it’s now been almost 12 years with rates only going down or staying the same. That’s a massive generation of mortgage holders who bought a home during this time that have never experienced a rate rise.

The RBA is fully aware of this and is not likely to rush into raising rates quickly so there is no need for panic. However, the rises coming are inevitable and everyone must prepare for them. You could consider fixing, however, these rates have all risen dramatically already so may or may not suit your needs.

My suggestion is to increase your repayments now and build up a buffer.