After much speculation, the Reserve Bank finally moved to raise the interest rates for the first time in 14 months in a move that caught a lot of homeowners by surprise, even though the writing was on the wall for quite a while.

Rates are dependant on what the local and global economy, and the RBA uses the interest rates to either accelerate or put the brakes on the economy (ie how much people are borrowing or spending).

So based on what the economy was doing, the RBA saw it fit to apply the brakes (move the rates up), and have given strong indications of rates being put up again in the near future.

With rising petrol prices, and interest rates, the flow on effect will be a rising cost of living through increased prices of consumer goods.

For the prudent borrower, now is the time to review your finances and start consolidating your debts, and fixing portions of your loan.

The best way to go about this is to fix the portion that you will not be able to pay off within two years as a separate split, and keep variable the amount that you will be sure to be able to pay off in two years. This helps you get the best of both worlds, paying off your mortgage quickly through the variable portion and having the certainty of a fixed rate that is immune to the interest rate fluctuations.

To have your finances reviewed contact a reputable broking house such as Right Group Australia on 1300302166