BORROWERS WARNED NOT TO BITE OFF
MORE THAN THEY CAN CHEW
“Don’t get burnt if rates rise and house prices fall” says leading direct lender
EMARGOED MEDIA RELEASE
WEDNESDAY 04 AUGUST 2010
Despite interest rates remaining steady over the past few months, direct lender www.MyRate.com.au is
warning borrowers not to bite off more than they can chew because the current environment may not
last forever.
“If the government’s current growth predictions to return the budget to surplus are correct, then there is
a good chance that we will see more rate rises over the next 12 to 24 months” commented Kevin
Prospective borrowers should certainly bear that in mind when considering getting a home loan. While
interest rates remain on hold for the moment, Sherman is cautioning those who are already nervous
about future repayments. “It’s important to take stock and ask yourself the question: ‘will I be stretched
in my repayments if rates rise?’ ”.
Home loan rates have already increased from the lows reached a year ago, however the current level
is still way below the peaks of the mid 90's when rates were around 10 percent
#
. Current rates are at
least one rate rise below the decade long average from that period.
Lower rates are unlikely to last forever. “There is always the possibility that house prices will fall and
rates will go up during the term of your loan. Borrowers who bet against this could find themselves in
trouble” explains Sherman.
At a minimum, Kevin recommends that Australians looking to take out a variable home loan action the
following 2 checks before signing any home loan contract:
Variable rates change so plan your finances and budget for several interest rate increases. If
repayments are tight at current levels, consider how you would cope if rates were higher; and
Compare home loans and shop around. Look for a lender with a good reputation and a product
with a low interest rate and low fees but that still has all the flexibility you need to help reduce
interest payments, such as allowing for additional repayments and redraws. Interest rates can
vary by as much as 1 percent so shopping around really can yield significant savings.
Having satisfied themselves that they wish to proceed with obtaining a home loan, borrowers should
also familiarise themselves with the loan application process and understand what may limit their
chances of success. MyRate’s blog provides a list of the top 5 reasons borrowers are being rejected in
the current lending environment.
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INTERVIEWS
Contact: Natalie Ball (02) 9240 8132
ABOUT MYRATE.COM.AU
MyRate.com.au is Australia’s leading direct home loan lender, funded by ING Bank (Australia) Limited. MyRate's fully
featured standard variable rate home loan rate is now 6.63%p.a. (or 6.59% pa for loans above $600k) with no fees on
standard applications - one of the lowest in the country. MyRate also boasts a fast turnaround with a 5 day formal
approval guarantee.
For further details: www.myrate.com.au or 1300 663 558
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