That’s still up for debate…but what is becoming more apparent is that an increasing number of people are exercising financial caution, whatever way the next rate decision goes.

And with day-to day-financial news dominating our TV screens, it’s not hard to see why.

So whether you ‘re an owner occupier, first home buyer or investor, every borrower should take some time now to evaluate their own financial position to protect themselves for whatever lays ahead.

Here are some simple strategies to consider:

OWNER OCCUPIERS: should review your budget to try and direct more funds towards your current mortgage repayments which will give you breathing space if rates rise – or if you need to carry out any necessary works on your property.

OWNER OCCUPIERS: should limit discretionary spending, particularly toward the end of the year period when budgets routinely blow out.

FIRST HOME BUYERS: should hold off on purchasing everything new to go with the new house and instead acquire household items as you can afford to pay for them – preferably in cash.  Don’t unnecessarily rack up additional debt.

FIRST HOME BUYERS: may want to consider taking in someone to rent a room and help you pay the mortgage. With rental demand still high and provided your living circumstances allow for it, this can be a viable option to help you meet budget shortfalls.

INVESTORS: shouldn’t take it for granted you will always have tenants to help you pay the mortgage. Have a plan B ready in case the property is untenanted for any period, such as having funds set aside to continue paying the mortgage or moving in yourself if your situation allows for it.

Perhaps that’s because after having some downtime during Christmas and New Year people have been able to do all the necessary cleaning up, de-cluttering and squaring away of the legalities that need to be sorted before their property goes onto the market.

And that does take more time than you think – and more planning than you anticipated.

So as we now approach mid-March, regardless of whether you’re a buyer or a seller, now is a good time to keep watch on the market to see what sorts of prices are being achieved in the area that you live, or the area you’re planning to live in.

At the same time there is much speculation about what will actually happen to interest rates this year with some analysts predicting that rates won’t actually rise by as much as was forecasted at the beginning of the year.

A number of experts are now saying that the more likely scenario is that rates may rise 1% this year, rather than the previously predicted 2% and this is not only because of any impact that events such as floods may have had but because of various economic factors.

For this reason, March remains an interesting time to watch how that sentiment is affecting property prices and it could provide a decent barometer for the year ahead.

Stay tuned!

According to Frank, buyers in and around that region are now feeling relatively confident with where interest rates are currently and as a result activity is strong within the first home buyer, upgrader and investor markets and there are some good opportunities on the market.

Rolling land releases in emerging areas such as Oran Park and Gregory Hill are continuing to attract first home buyers due to their convenient location and because surrounding public transport links allow buyers to still be within an hour’s commute of the Sydney CBD.

Frank says he is seeing more and more young families becoming attracted by the affordability of entry level homes in the area, particularly those priced between $250,000 to $320,000.

And he says existing borrowers looking to upgrade can also find themselves a home around the $450,000 mark which allows them to upgrade, but remain living within the area.

More investors are now coming back to the Campbelltown/Macarthur region, says Frank, a trend which he attributes to the tight rental market and strong returns for the area.

The locality is also known for its nearby industry but is also within easy reach of rural property so has added appeal for people who may be looking for a lifestyle property.

“There is already a strong sense of community and with more young families moving there, this will only get better over time,” he said.

1. All eyes watching to see what the Reserve Bank does on December 7
2. Watching to see how the major lenders and other lenders react
3. Borrowers looking to see how both standard variable and fixed rates move
4. Existing and potential first home owners watching how the property market in general reacts.

And although the property market is about to go into hiatus for the Christmas/New Year period there’s no question the rate rises already delivered this year have done their job in cooling down the market with lower auction clearance rates and prices, so any further impact for the rest of the year is likely to be minimal.

However the current case of the rate wobbles can be cause for new opportunity as rates have time to settle into their new levels for the next two months until the Reserve Bank meets again in February.

In fact, it’s a perfect time to watch what has happened to all rates over this year and have a look at the new playing field that has opened up for the benefit of borrowers.

It’s a buyers market.

And I’m not just talking about the interest on your loan, but working out ways to make your mortgage work in the best interests of your financial wellbeing.

There are several ways to help you gain the most from your home loan – whether you’ve just bought your first home or if you’re already an established homeowner.

So as the Reserve Bank decides whether or not to raise official rates once more next week, it’s in your interest to consider the following as potential money savers:

1. For brand new home buyers, make your first repayment as soon as possible. Don’t wait until your first mortgage repayment is due, instead make the first loan repayment as close to settlement date as possible.  By doing this you can save on interest charged on the balance of your home loan account.
2. Increase the frequency of your repayments – selecting fortnightly repayments over monthly repayments means you automatically make an extra repayment on your mortgage each year.
3. Understand the mortgage industry – regularly reading newspapers, mortgage magazines and the correspondence you receive from your lender, will keep you up to date with industry and government changes which may affect you and your mortgage – and adjustments can be made.
4. Reduce your fees – keeping any fees to a minimum can save you substantial money over the term of your home loan.  So, if you know that you’re likely to make a lot of transactions regularly, select an account which will accommodate by keeping charges to a minimum.
5. Make extra repayments – whenever possible, make extra or lump sum repayments.  Making additional repayments will help you minimise your exposure to future interest rate increases or changes in property values.
6. Budget wisely – when you consider that every extra repayment is helping you pay your home loan off sooner, it makes sense to adjust your spending occasionally to accommodate that extra repayment.  You don’t have to give up all of life’s luxuries but modifying your spending during the year (particularly as we enter the all important Christmas period) can help you become mortgage free sooner.

 So what type of loan structure is right for you – right now?

 The answer to this will largely depend on where you are in the home loan cycle and how flexible you wish to be in the years ahead in relation to managing your mortgage and finances  

 And the important lesson is before you jump in the deep end to understand the various loan structures available and what they can offer you before you decide which one is your perfect match.

 Standard Variable Rates

 These rates are the most popular among borrowers as they largely mirror what’s happening to official interest rates and also provide the most flexibility in relation to the range of features attached to the loan.

 Average standard variable rates at the moment are sitting around 2.5 percent above the Reserve Bank official cash rate benchmark but can commonly vary by half a percent between many major lenders.

 When shopping around for a standard variable rate, you should note the comparison rate on the loan, which by law must be advertised alongside the standard variable rate. The comparison rate shows the annual percentage rate of the loan when compulsory fees are included and gives a true cost of the loan.

 However the comparison rate doesn’t include any costs that may be incurred during the period of the loan such as redraw, early termination fees and dishonour fees etc so you need to be aware of this when you make your final choice.

Fixed Rates

Rates on fixed loans are generally set for a period of one, two, three or five years, with some lenders offering fixed loan rates beyond that period.

And this appeals to people who want certainty on their loan repayments, particularly in a time of rising rates.

But the timing of when you fix your rate is often critical and will determine where your fixed rate compares to standard variable rates on the market at any time during the loan period.

With fixed rates, lenders predict ahead where rates will be over the term of the loan period and as a result fixed rates can vary substantially between loan providers. They also usually have high break fees associated with them in order to deter borrowers from switching out of the fixed loan if they find they have locked into a rate too early, and want to change over to another loan.

For this reason many borrowers choose to hedge their bets and fix only part of their loan (known as a split loan), leaving the rest of their loan on a standard variable rate to give them the best of both worlds.

With fixed rates, someone always loses – either the lender or the borrower –  and it’s wise to remember that the lender has many tools at their disposal to make a more accurate call of where rates are headed.

Introductory or honeymoon Rates

Unlike fixed rates for one or two years, these rates are normally variable and are considerably lower than the average standard variable rates on the market i.e. half to one percent for a defined period of time.  This particularly appeals to many first home buyers and others looking for a good head start.

Introductory rates are routinely offered to borrowers for 24 month periods but can also be offered for 12 or up to 36 months.  It’s important to remember with introductory rates, that they will move up and down with interest rate movements, but will always remain lower than their revert rate.

After the introductory or honeymoon period the rate then reverts to a variable rate set by the lender, so anyone considering choosing an introductory home loan should ask the lender what the ‘revert rate’ on the loan is and how it stacks up against their other variable rates in the marketplace.  

The revert rate is important in determining how much you will pay in interest over the life of the loan.  Because if the revert rate is uncompetitive i.e. higher than most variable rates available, the value of the whole package can be more expensive over time.

Currently there are some very good introductory deals on the market for 12-24 months with low revert rates and low to no fees, so you should check both of these key features and also check the lenders comparison rates on the loan.

Capped Rates

This loan style was quite popular in the 1990s and was well-liked in times of rising rates.  Currently there are only a few products of this kind available – so the resurgence in popularity is slow.

The capped rate is usually associated with a variable loan structure but there is a ‘cap’ to how high that rate can go during a certain time period during the course of the loan.   With this loan, the rate can’t go higher than the capped rate for a set period, however it may move up and down below it.

The term that the capped rate may be in place for may vary between loan providers, but usually ranges from around 24-36 months from settlement.  The attraction exists because the capped rate provides security and peace of mind in rising rate environments, and also offers the flexibility that a standard variable rate loan has in relation to loan features.

If you are considering choosing a capped rate product you need to vigorously compare fee structures and the current competitive nature of the rates with other products on the market – as sometimes the appeal of the peace of mind can end up costing you money.

Tracking Rates

A loan type which has emerged recently on the market to appeal to first home buyers and the refinance market, these rates are ‘tracked’ against the average standard variable rates of the big four banks and are promoted as being lower than those rates by a certain amount of (usually) between one half to one percent for certain time periods, usually up to three years. 

If you are considering these loans, you need to be aware of the two main differentiators between the tracking rates of various loan providers which are the fees associated with the loan and the revert rate when it comes off the tracking rate period.

So stop now and ask yourself, have you taken the time to do some homework and find out more about who’s actually going to lend you that money? Because if you haven’t yet considered this, there’s no better time than now to find out why its so important.

By conducting some initial research, you can find out quite a bit about the way a lender does business and avoid any unnecessary concerns that might otherwise arise during the course of the relationship.

Because it’s important for you to understand when you sign up with a lender – you’re not just buying the product, but the service as well.  

Where a loan may look good on paper, you also need to be able to rely on the right lending representative to guide you through all the mechanics of the loan to ensure you continue to get the most out of your lender, your loan and the relationship.

And although education is a powerful tool – not every lender is willing to make the time and effort to help empower you over time to take more ownership of your financial decisions.

So before taking out a home loan, there’s some simple checks you can make. These include:

Visiting the lender’s website

By doing this you can establish how long they’ve been in business, products they offer, interest rates, industry memberships and the people behind the business and its history.

Asking around

A good way to measure the quality of a company’s products and services are through word of mouth. Ask a broad range of friends, family and business associates if they’ve had dealings with the company you’re considering, and if so, how they found the experience.

Obtain a copy of the credit contract for your loan

By doing this you can look at the terms of the loan and your obligations to determine if you will be able to meet them. The credit contract will also outline any fees associated with changing loans – and if you do have any concerns, seek some independent legal and financial advice.

Organise a face-to-face meeting with a company representative

After conducting some preliminary research, set up a meeting with a lender from your organisation of choice. Come armed with any questions and queries your earlier research may have unearthed.

Check that the lender is a member of the Credit Ombudsman Service Limited (COSL)

This service protects the rights of any borrowers who deal with a COSL member and allows them to take a complaint they may have against that lender to an independent dispute resolution body. 

And finally – if you don’t feel comfortable with the direction your lender is taking you, don’t sign on the dotted line. There are many good lenders out there and the buck really does stop with you.

In case you haven’t noticed – there’s a pattern emerging in the world of business and politics where women are slowly, but surely, starting to take centre stage.

And that pattern has also transcended into the world of finance in terms of women empowering themselves in the ways of the property market.

In fact, unlike many previous generations, women are now a force to be reckoned with in the consumer economy and these days are overlooked by lenders at their own peril!

Growing numbers of women have over the last two decades since industry deregulation taken advantage of low home loan interest rates and more readily available loans to buy their own homes or make property the foundation of their investment strategy.

And its simple to see why – women are no longer waiting for Mr Right to come along before buying their first home, but are turning instead to investment in bricks and mortar to help secure their financial future.

So whether you are married or single, how do you take the first steps in preparing to become a ‘woman of independent means’?

FIRSTLY: you need to look at your income and set your expectations accordingly. And then be prepared that you may even have to lower those expectations in order to enter the property market. Because although too many people these days seem to want it all straight away, as the main breadwinner you don’t fall into the trap of thinking you have to have it all – and have it now.

SECONDLY: get rid of any personal debt with the aid of a realistic budget. Consider consolidating any credit card debts into one lower interest personal loan and once this has been paid off, then start saving in earnest.

FINALLY: shop around for the best loan and the best lender. There are so many loan products to suit first home buyers, including single women. Explore different avenues, such as the size of the deposit you really need, assistance from government grants, and whether you could buy in with family or friends just to get your toe in the door. And look for a lender that genuinely has your best interests at heart – and isn’t just after a sale. Ask around and do your own research.

The possibilities are endless and property ownership can be an exciting path to travel on – as long as you continue to check you’re still on the best possible track and remain committed to reaching your end destination.

So with a few words of caution and in the wise words of my mother – remember to remove your rose-coloured glasses when you’re looking at any property as the emotional connection you create, may end up costing you serious money. 

This is because there are properties with good potential and potentially good properties – but it’s working out the difference between the two that can help save you time and money. 

I deem properties with good potential as ones that may need some work but currently come across like someone who needs a cosmetic makeover and some TLC. 

And as for potentially good properties – I categorise them as ones that could be ‘potentially good ‘– were it not for that wall that’s falling down, or that kitchen that reminds you of the war or those floorboards you just put your foot through.

 That’s because these items, as well as bathrooms, electricals and roofs are the sorts of features on a property that unless you are confident in your building and renovation experience, are not items that are simple and cheap to fix up or replace.

 So while DIY shows can happily show us the way to achieve the look-for-less, you do still need to remember that there are some aspects to fixing up a property that are best left to the professionals.

 And if you’re heading out now to look at properties that you think may fit into your dream home category – make sure you leave your rose coloured glasses at home and enlist the advice of trusted friends and professionals.

 Better still – invest in that highly recommended building inspection so you can get a professional opinion from someone who may have clearer vision than you.

 And finally, whether you intend living in the property yourself or renting it out – if you do find yourself falling head over heels in love with it, do what you would with any prospective suitor and look as what else it has to offer!

 Look at features such as rental yields, the population growth for the area, the quality of local infrastructure and what the property can deliver you in terms of price growth, because the lure of property, like beauty, can also be skin deep – and consequently may not stand the test of time.

According to James, although the last few rate rises and the Federal Election have played their own roles in curtailing some sectors of the property market, there has still been growing interest in construction loans.

And this interest has not been with first home buyers as you would expect, but up-graders and investors content to wait just that bit longer for the construction process to rollout because they’re keen to take advantage of the supply of land available.

James also reports that like some other regional areas around Australia, the Hunter/Newcastle area is continuing to appeal to investors and owner occupiers, because of the area’s proximity to the coast as well as to rural and wine regions.

And James says this is because infrastructure is firmly established, property values are holding strong and for people looking at the area to live in, they can enjoy all the benefits the country has to offer – while still only being two hours drive from the bustle of Sydney.

The area is also renown for its industry diversification, which is attractive to investors looking for secure long term rental yields as well as empty nesters on the hunt for a certain lifestyle, but without the city price tag.

As a final word on what the Hunter/Newcastle region has to offer, James says: “Its telling when young locals leave the area to follow their dreams and then find themselves returning years later, because they’ve realised the grass really is very green on this side of the fence.”