The Australian dollar is currently trading at a two-year high against the US dollar. This, on top of record low interest rates makes it an excellent time to pay off more on your home loan.
Here’s what you need to know.
The improvement in the Australian dollar came as a surprise to many finance heads in Australia, including the Reserve Bank of Australia (RBA).
The RBA is in charge of monetary policy in Australia, and sets monthly interest rates based on the state of the economy.
Their goal is to keep a balance within the Australia economy, by adjusting interest rates in response to the market.
Chief Economist of BetaShares Capital, David Bassanese reportedly told ABC News:
"The RBA is likely to be quite annoyed at the rebound in the Australian dollar, which it would continue to regard as unhelpful for our economic transition.”
Bassanese was quoted as saying:
"Although the economy appears to be travelling well at present, the challenges will get harder not easier in 2018 - suggesting rate hike expectations, and current Aussie dollar strength, will prove short-lived."
Although the increase in the AUD is touted to be only short lived, there are still opportunities for savvy investors.
It’s also important to remember that the RBA was caught off-guard by the shift, so interest rates remain low. (1.5% as of 4 July 2017.)
This so-called ‘perfect storm’ of circumstances makes it an excellent time to pay off more of your home loan.
Putting an additional $50 to $100 into your repayments per month is likely to make a marked difference in the long term, as your dollar will go even further than usual.
As always, we also recommend having your home loan checked over, just in case there is a more suitable loan available to you.
A good broker will compare many different loans, including products from niche lenders who often have attractive terms.
They will then let you know if a more suitable loan is available. This can mean significant savings, and does not take much effort, as your broker does the legwork for you.
If interest rates are to increase in the future, now is a good time to have a home loan health check, as you will be able to take advantage of low interest rates before they increase.
If you’d like your home loan reviewed, or are looking for a loan that not only matches your financial circumstances, but also your lifestyle and goals, please contact us.
We research and tailor a home loan specifically to your needs, so you have peace of mind, knowing you’ve found the right loan.
© 2019 Capita Finance Solutions Pty Ltd | ABN 36 166 229 321 | Australian Credit Licence 389087
