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Date Published : Monday, February 04, 2008
Consumers requiring personal and home loans should take a step back and look at the bigger picture in the current financial climate, a leading industry body has claimed.
With a predicted interest rate rise on the cards later this week, borrowers are being urged not to rush into any rash decisions when choosing all loans as they may get stung when the Reserve Bank of Australia (RBA) makes its decision.
According to the Mortgage and Finance Association of Australia (MFAA), a possible third rate rise in six months would harm the repayments of millions of Australians currently on variable rate home loans, as well as the rate of interest charged on personal loans.
MFAA chief executive Phil Naylor said: "Lenders offer many different loan options, each with varying rates, terms and conditions, service and fee packages.
"It is important when researching a loan to consider all of these things holistically. Don't jump at a loan just because the interest rate is low. It is no good having a low-rate home loan if the exit fees are too high."
Mr Naylor added that borrowers should consistently perform a "health check" on their finances in order to avoid and large scale debt problems.
"You may decide that after doing a check that you're not going to be better off, but it's worthwhile getting the check done.''
Since the start of 2008, a number of Australia's largest financial institutions - including National Australia Bank, Commonwealth Bank and Westpac - have raised the rate of interest charged on variable rate home loans away from the rate decided by the RBA.
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