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  • Interest rates and what they mean for your first home loan

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    Are you currently scouring the market for a new home but are unsure how interest rates could affect the price of your mortgage? You're not alone; the Reserve Bank of Australia (RBA) has tinkered with interest rates three times in the last 18 months and there may still be more changes to come.

    Buying your first home is a huge commitment, and you should avoid the temptation to rush.

    The key cash rate is currently 1.75 per cent, following reductions of 0.25 percentage points in both February and May 2015, as well as May 2016. Interest rates are now at record lows, with the ASX RBA Rate Indicator revealing there is a 66 per cent market expectation that they will decline further in August.

    But what do these figures mean to the average first home buyer? Well, we're here to help you better understand interest rates and how they could impact your mortgage if you decide to purchase a property in the coming months.

    How much will my loan repayments be?

    This is the big question on most homeowners' lips and first time buyers are no exception. Lower interest rates mean lenders can borrow money more cheaply from the central bank – a trend that often benefits consumers.

    Bear in mind that providers are unlikely to pass on all the savings from reduced rates. Nevertheless, home loans should become more competitive, giving first home buyers a greater variety of choice and lower repayments once they step on to the property ladder.

    Whichever deal you choose, it's important to factor in potential interest rate rises in the future, as they won't stay at record lows forever. You'll need to make sure you can afford your repayments should the RBA decide to hike rates.

    Interest rates and mortgage payments. Interest rates could affect your mortgage repayments.

    Finding the right first home loan for you

    Buying your first home is a huge commitment, and you should avoid the temptation to rush in just because interest rates are currently favourable.

    Every buyer's requirements are unique, which means there's never a one-size-fits-all mortgage deal. Your ideal arrangement will depend on a range of factors, including the size of your deposit and whether you want a fixed or variable rate deal.

    There may also be grants available in your area that make buying a first home a more attractive prospect. Whatever your needs, the team at Mortgageport is here to help, so please get in touch to see why now could be the best time for you to purchase a property.

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