Welcome once more to this month’s Dominion Finance newsletter, which is about preparing for the inevitable. Just like death and taxes, increases to the cash rate are now another grievance we must put up with.
Watching the Queen’s funeral recently, I marvelled at the perfect precision how all the pomp and ceremonies took place. There was constant reminders from the commentators how the Queen played a major part in the planning of her own funeral, along with her family, and experts to plan everything from the ancient English royal traditions to how many portaloos were required for her bereaved subjects to use while waiting to catch a glimpse of her final journey.
The Queen and her team identified their issue, created a plan, and then executed the plan to perfection.
This got me thinking of us, her poor lowly subjects, and Governor Lowe of the Reserve Bank. We know inflation is increasing in Australia and in many other countries, due to many ongoing problems in the world. Consequently, Governor Lowe is increasing the cash rate to combat the spiralling inflation.
Our issue is home loan interest rates are increasing, and accordingly our loan repayments are increasing also. For some of us this is an increase each month, and for those currently on fixed rates there will be a significant jump in loan repayments at the end of those fixed terms.
Therefore, you need to devise a plan to deal with the issue.
Firstly, go to our online calculators on the Dominion Finance website and find out how much more your repayments will be.
With this calculator you can work out the increase to your repayments.
https://www.dominionfinance.com.au/loan-calculators/fortnightly-repayment-calculator/
This calculator shows the impact of paying extra money on to your home loan.
https://www.dominionfinance.com.au/loan-calculators/extra-repayment-calculator/
After you have used our calculators, you will have an idea how much your home loan repayments will increase, and you need to have a plan to deal with this.
Then maybe analyse where you are spending your money and look for possibilities for savings; consider refinancing to a lower interest rate loan; start paying more off your loan each month now to get ahead on your loan and start experiencing the increased repayment amount. If you have an offset account, try to put more money into this account to reduce the interest that you are paying.
These are challenging times and Christmas with its extra costs is just around the corner, however a plan assists in dealing with the increase in repayments issue and can keep our stress and worry levels down.
When you have determined your plan, the final important part is the execution of the plan. Just like the huge team of people the Queen had who executed their plan to make her funeral the success that it was, you need to execute your plan so you too can have a successful outcome.
Remember we are your expert team always here to help you.
Until next month
At its meeting today, the Board decided to increase the cash rate target by 25 basis points to 2.60 per cent. It also increased the interest rate on Exchange Settlement balances by 25 basis points to 2.50 per cent.
The Board is committed to returning inflation to the 2–3 per cent range over time. Today’s increase in interest rates will help achieve this goal and further increases are likely to be required over the period ahead. The cash rate has been increased substantially in a short period of time. Reflecting this, the Board decided to increase the cash rate by 25 basis points this month as it assesses the outlook for inflation and economic growth in Australia.
The information provided in this newsletter is general in nature and does not take into account your personal circumstances, needs, objectives or financial situation. This information does not constitute financial advice. Before acting on any information in this newsletter, you should consider its appropriateness in relation to your personal situation.
