With rate hikes on the horizon, investors should reconsider their current loan facilities, a mortgage adviser company has urged.

“Interest rates are at historic lows and there is widespread speculation as to where they will go from here,” Smartline mortgage adviser executive director Joe Sirianni said.

While the Reserve Bank (RBA) has not ruled out further interest rate cuts, the money markets seemed to suggest rates would rise in future, he said.

Investors concerned about the impact of rate hikes on their household finances have several options, according to Smartline.

“Indications are that it’s a good time to fix interest rates if you haven’t already,” Mr Sirianni said.

"The long-term average variable rate in Australia is about seven per cent, so fixed rates below five per cent really are attractive for most people.”

He encouraged investors to look beyond the “headline rate” to the “comparison rate” for a fuller understanding of the fees associated with the loan.

He also suggested investors choose a one-, two- or three-year term over the longer-term rates available.

“While fixed rates are available for five-, seven- and even 10-year terms, that is a very long time to be committed and the break fees can be significant, totalling thousands of dollars,” he said.

"Investors should also get in the habit of making higher repayments, analyse their spending patterns and seek expert advice."
 
Reproduced in full with permission: Smart Property Investment Investors urged to rethink rates 28 October  2013

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