interest rates

Interest rates are on the rise! You may not be feeling it yet, but with further increases expected, you may need to start making some changes now that will protect your future finances.

Although we can’t say for sure what the future holds for interest rates, ANZ economists are predicting that the cash rate will rise to 2 per cent by the end of 2023, and possibly above 3 per cent sometime thereafter.

Here are some tips to help you prepare for rising interest rates!

1. Stress-test your mortgage repayments

Have you considered stress testing potential future commitments now? Stress testing involves putting some extra money aside for mortgage repayments before the increase is required. You’ll be able to assess whether you have enough room to move comfortably at an increased rate or whether you need to make adjustments to your finances.

Knowing you are in a good position to meet your future mortgage obligations can help give you confidence that your finances are in good shape. If you don’t end up needing the buffer that you have put aside, you could put it into savings, or use it to make additional repayments to pay off your loan faster.

2. Adjust your repayment schedule

Timing is key when it comes to your repayments. If you are on a monthly schedule, consider paying half your monthly repayment off your loan fortnightly. There are 12 months in the year and 26 fortnights so by switching to fortnightly, you will be paying one extra monthly repayment per year. This means you can pay off your loan faster and reduce the amount of interest you pay. By just doing this alone you could reduce a 30-year loan term down to a little over 24 years! 

3. Consider refinancing

During periods of increasing interest rates, you should check that you still have the lowest rates available. Use this time to investigate your options as small wins could have a significant impact on how much interest you pay over your term. 

Remember to look carefully at the terms of your potential new home loan. Having too short of a loan term, whilst it may save you interest over time, it may also expose you to the burden of higher repayments if interest rates continue to rise. 

Worried about your finances with rising interest rates?

If you are worried about your financial health with interest rates on the rise, we recommend you take the following steps: 

  • First of all, do some research to find out which banks have the best interest rates on offer. There are some great comparison websites out there such as Canstar or finder. Then compare the other lender rates and offers to your own bank mortgage loan. If you’re not on a competitive deal then take some action.
  • Always talk to your current lender first to see if they can do a better deal. Let them know you have shopped the competition and even quote some of the better rates on offer. More often than not, your current lender will offer you a better deal, as most would prefer to retain your business rather than lose it.
  • If you don’t have much luck with your current lender, then it might be time you look at refinancing your home loan. If you are looking at refinancing then consider speaking with an expert such as a Mortgage Broker, who can assist you in finding and organizing a good loan deal to reduce your rate and repayments.


Learn more about APS Mortgage Broking.

Written by APS Manager of Home Finance, Tony Calder.

Tony has over 30 years of experience in lending and finance. His focus over the past 20 years has been in residential property lending, initially at Westpac and for the past 6 years at APS Benefits Group. Tony enjoys helping APS members and clients get the right loan to meet their specific needs and one of the advantages of working at APS is that he has access to a great range of lenders. APS is a residential property lender, so if someone finds it difficult to get a loan through the banks, Tony can on most occasions fund the loan through APS, which is a great outcome for members and clients. When Tony isn’t working, he enjoys travelling, dining out with family and friends and playing golf.