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Are you prepared for higher interest rates?

Westpac has become the first of the major banks to lift its variable rates, and it might only be a matter of time before the others follow suit.

The bank announced that it’s raising its variable rates for both owner-occupiers and investors by 14 basis points, effective from September 19. This will affect new and existing customers.

Meanwhile, the Reserve Bank of Australia (RBA) has kept its official cash rate at the record low of 1.5 per cent since 2016 and there hasn’t been a rate hike for 8 years.

Lenders have been moving their rates independently up and down of the RBA for some time, but Westpac is the first of the Big Four to hike theirs.

The RBA governor, Philip Lowe, noted in Canberra on Tuesday that many borrowers have never experienced a rise in official interest rates.

“If we continue on this current improving track, as we expect we will, it is likely that the next move in official interest rates will be up, not down,” the governor said.

Lowe also urged borrowers to prepare themselves for higher rates.

Higher interest rates may sound daunting but there are a few things that borrowers can do now to help protect themselves against mortgage stress.

Shop around – Some lenders may be pushing their rates up but that doesn’t mean that there aren’t some great deals around still. If you’re unhappy with the amount you’re paying then find out what else is on offer from other lenders or try to negotiate a better deal with your current one.

Look for ways to save – If the thought of paying a higher mortgage rate is getting you down then find ways you can cut costs in other areas of your life. Cutting back on eating out, monthly subscriptions or other regular expenses may help reduce the financial impact of a rate rise.

Consider a fixed rate – Want to have more certainty about the rate you pay? There is always the option to move over to a fixed, or partially fixed, home loan rate. There are plenty of good fixed home loan deals at present, however it’s important to be aware that these types of loans can have restrictions.

If you want any assistance with finding the best home loan rate, get in contact with Professionals Finance.

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