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Date Published : Thursday, April 10, 2008
Two out of every three homeowners in Australia will be under extreme pressure to refinance their mortgage or sell their homes to make ends meet if there is another interest rate rise, a new survey has revealed.
The study by Loan Market and X Inc Finance shows that another rate rise will force them to sell their home and move to a less expensive area of the country in order to afford their mortgage repayments.
Only 17.5 per cent of those polled said that another interest rate rise will not give them a substantial problem in the future, the Daily Telegraph reports.
Earlier this month, the Reserve Bank of Australia voted to hold interest rates at 7.25 per cent after two successive rises put rates at their highest level for more than 12 years.
Cannex financial analyst Lauren Newlands told the publication that choosing a fixed rate home loan - rather than the more popular variable rate mortgage - could act as insurance for those currently struggling to keep up.
"Fixing is good for people who can't afford another rise, but if they do come down, then they'll find they are paying back their loans at a higher rate than everyone else," she said.
"If the wholesale market for money drops, the lender stands to lose when you want to cancel the loan."
Ms Newlands added: "Instead they will calculate what they will lose and make you pay it."
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