When will interest rates rise and how can you prepare?

Interest rates look set to increase for the first time in over a decade, with huge implications for the property market. We explain when interest rates are expected to rise and outline strategies home owners and buyers can use to get on the front foot and prepare. 

Record-low rates may soon be a thing of the past, with economists tipping the Reserve Bank of Australia (RBA) to start increasing the 0.10 per cent cash rate as early as the second half of this year. 

But the big four banks, as well as many other lenders, now expect rates to start rising from June.

What can you do to prepare for an interest rate rise? 

While the prospect of rising interest rates can be nerve-racking, there are things property buyers and owners can do now to soften the impact. 

1. Review your budget 

In times of financial uncertainty it’s important to review your budget.

Make sure you can meet your financial commitments now, but also that you can meet your future commitments should interest rates change. Building up a sizeable buffer in your budget now could help you stay on track when rates rise in the future

2. Get a better deal

Locking in a lower interest rate now could help save you thousands of dollars in repayments on your mortgage in the future. 

For current homeowners, explore your options beyond your current bank or lender. 

Often new customers are offered a better deal than existing customers. If you haven’t revisited your home loan with your bank for a few years, you could potentially get a better deal and save quite a bit of money by switching.

3. Review your loan structure 

Looking at the current arrangements of your home loan and assessing whether they still suit you is an important part of preparing for a rate increase

*Are there additional costs you’re paying, for instance, because you perhaps have an offset mortgage, but maybe you’re not using it that way? This is a conversation you may want to have with your current bank or lender.