10 May 2022

What Causes the Changes in Interest Rates?

Changes in Interest Rates

The Reserve Bank of Australia is the central planning authority for the economy. The RBA establishes monetary policy and keeps an eye on economic activity. For example, they use the Consumer Price Index to monitor inflation. If prices increase too much, the RBA might decide to make changes to the cash rate. The action will lead to changes in interest rates too. In addition, the RBA keeps an eye on the amount of borrowing occurring, too. Low-interest rates benefit the consumer. However, it becomes tempting to obtain too much debt. Every individual will reach a point when they can no longer repay their debts. Thus, the RBA will raise the cash rate before this point. 

Therefore, changes in interest rates occur when the economy becomes overheated or too sluggish. The goal is to use interest rates as a tool to spark economic activity. Consumers must practice fiscal responsibility in their finances. It’s the best way to hedge against sudden increases and fluctuations. When rates drop, it’s always an opportunity to refinance a home loan, especially if you started with bad credit, low doc, or a guarantor mortgage. 

Plus, if you’re not a Mortgage House client, it’s a great time to become one. We can refinance your mortgage to move it to our operation. 

Changes in Interest Rates Conclusion

When changes in interest rates occur, Mortgage House clients can rest assured that our team will provide tools to help offset them. To explore your options, contact our lending specialists today.

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