Will mortgage rates drop further? Advice on what to do.

sutiive on 31/03/2020 - 17:57

Will home loan interest rates drop further? And what would you do if you were me?

We've currently got 2 Westpac loans set up 4yrs 3 months ago - fixed (up in December) at 5.5% with $131k total with $30k in an offset. Variable at 3.09% with $220k total and $190k in an offset.

The fixed bothers me a lot beacaue we can't pay any more into the offset and seeing the rates at the moment I'm tempted to break and remortgage. The variable is not an issue really considering how bug the offset is.

I'm keen to hear if people think now is the time to switch (and why) or to keep waiting (and why). And what you'd do in my situation? My wife is about to stop working due to being pregnant so in 3 months we'll be single income which is why we've wanted a decent chunk on an offset in case I ever lost my job.

Would be grateful for any advice!

Financial

Comments

  • sutiive on 31/03/2020 - 17:58
    +3

    *break and refinance

  • Ocker on 31/03/2020 - 18:15
    +5

    Answer would depend on what your break costs for existing loans are

    • aragornelessar on 31/03/2020 - 18:32
      +1

      Nothing says spreadsheet time more than mortgage calculations

      • sutiive on 31/03/2020 - 21:35

        Haha. I do love a good spreadsheet.

    • sutiive on 31/03/2020 - 21:40

      Last time I asked was probably 6 months ago and it was around $2k

  • sahh on 31/03/2020 - 18:49
    +2

    Some banks are offering cash rebates for refinancing, this will offset some of the break fees

  • [Deactivated] on 31/03/2020 - 18:54
    -1

    Interest rates are about to sky rocket abd youll be saving money. Hang tight.!

  • ShortyX on 31/03/2020 - 18:54

    Out of interest, why did you fix that portion for 5 years?

    As previously mentioned, just do a comparison between breaking vs not breaking.

    • sutiive on 31/03/2020 - 21:37

      I think at the time we thought interest rates were going to go up so wanted to anchor some in at a fixed rate. Our variable was much higher at the time and closer to the fixed portion - maybe 4.4%. It may have been bad advice I don't know. Obviously that never happened and it backfired a bit.

    • sutiive on 31/03/2020 - 21:41

      But do people expect rates to drop further? That's the other part of my question. Thanks

  • Help on 31/03/2020 - 19:15
    +1

    Keen to hear what others have to say as well. I was offered 2.59 fixed investment loan and am tempted to take the offer, currently at 3.42 variable

  • chumlee on 31/03/2020 - 19:52
    +3

    Variable rates will not go lower

    Bank margins are getting slimmer & due to coronavirus, there will be a large number of mortgages suspended for 6 months.

    Dividends will need to be cut and this means no more variable rate cuts.

    Borrowing is already ridiculously low

  • sutiive on 31/03/2020 - 21:38

    Fixed is actually 4.5%. My mistake

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