Happy New Year - or is it for mortgage holders (and aspiring ones)? 2018 has kicked off with increased chat about interest rate hikes.
More positive prospects for economic growth and predicted stronger inflation have seen several high-profile economists forecast the start of rate tightening around mid-year, with possibly two rate rises in 2018 then more after that.
And naturally they'll hurt Sydneysiders the most. According to just-released ABS housing finance figures, the average mortgage in NSW - dragged up by the capital but much less than what many owners actually hold - is $456,100.
That means even those with an average mortgage may need to find an extra $131 a month by year end (with repayments going from $2535 to $2666, assuming you're on a typical 4.5 per cent now).
But Victorians, who've also seen a big jump in housing prices, will be up for $114 more ($2318 versus $2204) on the average $396,500 home loan.
With an average mortgage size roughly $40,000 less in Canberra ($355,900), the pain will be slightly lower there at $103 ($1978 to $2081).
WA residents owe virtually the same amount so will also have to shovel that much more onto their loans each month, while the average home loan in Queensland sits at just $332,000, so residents would only be up for an additional $95 ($1940 from $1845)
Or you could use not just the New Year but interest rate fear (whatever works right?) as your motivation to get in control of your mortgage. Here are my extremely potentially lucrative DO's and DON'Ts.
DON'T take on more debt than you can afford
OK it's probably too late for this - but tell everyone you know who's at the beginning of the journey ??? the ABS data show an uplift in first-home buyers. You can find your safe borrowing ceiling by stress testing your repayments for interest rate rises of 3 percentage points.
DON'T treat your home like an ATM
If you've long been a happy homeowner, realise that it is the greatest source of future financial security for you ??? or it is when it is paid off. Every time you dip into your loan for shiny, fast, fun stuff (I'm thinking cars and holidays in particular), you delay the sweet financial release of becoming mortgage-free. And for what? Something for which you only have photos to show, or that's going to be immediately worthless. The only exception to simply saving might be for renovations or something that would add to your property value.
DO look at refinancing
If you do just ONE thing this year to fix your finances, this should be it. The potential savings in 2018 alone are massive. While the average big bank advertised rate is 5.23 per cent, the best rate is way down at 3.39 per cent, according to comparison site mozo.com.au. That means a monthly repayment saving on the national average $388,900 loan of a massive $402 ($1924 to $2326).
But cleverer people than that will "up stumps" but still "stump up": simply maintain repayments at their previous level.
I've built a free app to show how much this mortgage-busting masterstroke will save you, in both money and time: My Mortgage Freedom Date. On the typical loan, it's an extra $50,099 on top of the $120,000 or so the mortgage switch itself saves. Not to mention the nearly seven years you'll slice off your loan.
Just remember to take the new loan over the same period you have left today, rather than a fresh 25 or 30 years, which would probably see you ultimately pay more interest, despite the lower rate.
DO use the system to your advantage
Alongside your mortgage should sit an offset account - a true one - and you should be housing every penny you possess in it ... your Holy Sh*t fund and your savings for everything. Get paid into the offset too and consider charging everything to a credit card during the month, and sweeping the money out of the offset only when your credit card statement becomes due (ensuring you pay no card interest over the month).
The ultimate interest saving from just $10,000 always sitting against the average loan at the average big bank rate is nearly $8000. And don't forget you could still (theoretically) have your $10,000 at the end.
DO throw every penny you can at it
It's never been cheaper to repay debt - for now - and doing so puts you out of harm's way of any future interest increases.
Nicole Pedersen-McKinnon is a commentator and educator who presents her Smart Money Start, fun financial literacy incursion, in high schools around Australia. Follow Nicole on Facebook at Nicole Pedersen-McKinnon Money