Yesterday we saw the first major bank increase their interest rates. Read it here. Some smaller lenders have also increased their interest rates over the past few weeks, however Westpac is the first major bank to take the plunge. What’s interesting about Westpac’s decision is that all their loans, Owner Occupied and Investment will increase, not just Investment loans. Obviously, Westpac has justified their increase with the typical ‘our cost of funds have increased’, but is this really the case? Looking at the data the rates have increased since March this year, but is it right for the bank to pass on the rate increases to customers or should they absorb the additional costs?

My opinion is that the other major banks and lenders will follow suit and increase their rates. I recommend that you don’t panic and try and pay off as much as you can off your home loan to create a buffer. Then work out your actual repayments based on a 0.50% rate increase from now, so if and when your bank increases their rates, you are not only actually ahead in your repayments but more importantly, you have conditioned yourself to the increased repayments and there will be minimal impact to your budget.

I’m always free to discuss your concerns, thoughts and intentions when it comes to your loans and what you can do to ensure rate changes aren’t a concern for you.

“Panic causes tunnel vision. Calm acceptance of danger allows us to more easily assess the situation and see the options. ” –  Simon Sinek

Thank you for reading