Is it time to lock in your home loan rate?

| May 29, 2009


Is it time to lock it in ? Westpac just recently  raised its fixed rate home loans rate. Normally when banks do this sort of thing , its is an indicator to the possible rise of the variable rates. This only could  mean one thing the home loan rates are definitely not going downwards anymore  and there  is the chance that bank home loan rates would continue only in the upward direction.

Which brings us to the question “ Do we lock in the  rates for our home loan now?”  the only risk seems to  be “ what if”.  Well we all know that these low rates are not going to last forever , so  its definitely the time  to be locking in rates at the risk of  possibly  one more rate decrease , which would possibly never come.

home loans

I was speaking to my better half  the other day and  she said that she was concerned how  a lot of people are going to be affected by this. We discussed how when we calculated before  we were eligible for a loan of $450,000 but now since interest rates have dropped  we could get a loan upto $650,000 , now that’s a big $200,000 grand borrowing raise . There has been no raise in our salary , which  means we could just go ahead and borrow  that new big amount based on current low rates now and get jacked  later. which means  when the rates are back to normal and higher rates moe like 7% or even more we wound be scrounging around for loose change.

bank loans

so what can be done to avoid this , borrow  only how much you can repay taking into account possible   higher lending rates  or then just be conservative  and borrow less than the banks tell you  what you can borrow.

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Category: borrowing capacity, Example, home loans, loan to value ratrio, Real Estate

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