Rising rates, inflation and a volatile stockmarket

Rising rates, inflation and a volatile stockmarket

14 December 2007

Rising interest rates, a volatile stockmarket, a global credit crunch and our own rising inflation rate can spell the end of living the high life for those who have been taking advantage of the easy secured loans that have been readily available in recent years.

The banks and other financial institutions have had to cover the costs of rising home loans but they don't want to keep doing that with the countries two biggest home loan lenders, the National Australia Bank and the Commonwealth Bank already declaring that they won't rule out home loan hikes ahead of any official announcement from the Reserve Bank of Australia.

What does all that financial uncertainty mean to the every day man in the street?

Now is the time to consolidate any debts you have accumulated through an extravagant lifestyle.

At the moment, the official home loan interest rate is 6.75% but it is expected to rise to 7% in February.

You can safely assume that if the status quo remains the same with the nations economy, that the official interest rate will rise again more than once in 2008.

That means your home loan repayments will be going up. Depending on the amount of your home loan, you can be looking at paying from between $20 and $200 each month in extra home loan interest repayments as the rates continue to rise.

In some cases you can be paying even more depending on the size of your borrowings.

At the moment, many people can cover an interest rate rise without feeling any financial hardship, but those who have borrowed to their maximum will already be feeling the squeeze.

Interest rates rose to 19% during the 1990s, can you afford to be repaying your home loan at 19% today?

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