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The RBA cash rate has remained the same for a whole year now and some experts predict it will not change for another few months.

After a much anticipated move, the RBA has once again opted to keep the cash rate on hold at 2.5%.

The RBA cash rate has remained the same for a whole year now and some experts predict it will not change for another few months.

The Reserve Bank Governor, Glenn Stevens, says it is still prudent that interest rates remain stable as there as been some growth in consumer demand and a strong increase in housing construction. RP Data research director, Tim Lawless, agrees that the interest rates will remain low until at least the end of the year in order to support housing demand. According to the HIA-CBA Housing Affordability Index, the low interest rate is being considered one of the main reasons why ‘affordability was recorded at the highest level in a decade’.

Some financial experts are predicting that official interest rates are likely to start rising in 2015.

According to Michelle Hutchison, Money Expert at finder.com.au, “borrowers can expect a ‘new normal’ level with interest rates likely to increase my 1.50 percentage points from next year.”

“Most of our experts believe the cash rate won’t reach the historical average of about 5 percent, but rather reach around 4 percent, which is 150 basis points above the current cash rate of 2.50 percent. And with 17 out of the 20 respondents betting on rates to start their way up from next year, borrowers need to ensure they can afford the extra cost.”

As interest rates are currently at a record low, now is the time for borrowers to get prepared and plan for the expected increase. For example, if you had a variable rate home loan of $400,000 and the interest rate increased by 150 basis points, your monthly mortgage repayment amount will increase by just over $400.

A good way to be prepared for future rate increases is to increase your current repayments by this amount now. This way you are not only getting used to higher repayments before you are forced to but you are building equity and saving interest right now.

This is also the time to reassess your finances and to shop around. You may find that there is a better home loan option available that can help save you money. Your lender will also be reluctant to let you go, so receiving a rate cut may be as simple as speaking with your current lender. Try our online repayment calculator to see how much your repayments will be with a State Custodians loan, and then dial it up with benefits from having your savings in an offset account and paying extra. This may provide you with the motivation to take action.

Low interest rates may not be around forever, so use it as motivation to take action now.