Thoughts on Home Loan Interest Rate Move in Next 3-4 Years

Hey Folks,
I am not as informed as one should be with an existing home loan.
What do people think about home loan move in the next 3-4 years? Is it wise to fix it for 3 years at 1.8x% ?

Need 70% to be financed, currently in full variable

[Please ignore personal circumstances variable from this calculation, just pure math where govt might reduce/increase the home loan interest rates]


  • +3

    Who knows?

    • Is your crystal ball down?

      • Eneloops are flat

        • meet you in the alleyway after dark… i know a bloke that knows a bloke that can get em…

        • Magic 8 Ball says, "Cannot predict now."

  • I think it will go up…hang on….no it will go down…or may not change at all..

  • +1

    You ask is it wise, but ignore personal circumstances variables.

    So suppose what you really asking is if it will be cheaper for you to fix, then it also depends on your current home loan rates, fees to refinance, do you need LMI, if you are refinancing with a different lender, and their loan fees.

  • I'm expecting a rise within 2-3 years so I fixed it for 3 years at the end of last year. Who knows what will happen in 2-3 years but for me personally, this made the most sense for my situation…
    In a few years I will assess it again but best to do what makes sense now and not predicting a future outcome.
    Cross that bridge when you get to it…

  • I think it will stay where it is for the next 2 years…unless of course we get this whole Covid thing under control, economy gets back up and interest rate follows. Stay tuned to the news.

  • +3

    With fixed rates lower than variable you'd be stupid not to at least fix it for 1 year because you'll save a few hundred bucks.

    With central bank rates at 0.1% doubt it would go much lower. If you want to look at a proxy then look at Bank of England rates. UK banks have a collar clause which means rates is BoE rate + margin but BoE rates will never go below zero.

    On the upside I can't see rates going that much higher. Reason. Look at economy and rates before COVID19? Only reason you have COVID based inflation is catch up spending (check growth line before COVID and growth line now). No need to thank me. Thank the government that focuses on unproductive industries (residential housing), retail consumption and cutting taxes for the rich.

  • +1

    The RBA governor says rates will remain stable for the next two years. Given lenders aren't racing any lower and are hinting that the only way is up (in their opinion), any fixed rate option with a 1.xx% in front is a good deal.

  • +1

    Despite all of the fanciful and uninformed talk about negative wholesale rates it is highly doubtful retail rates will drop much from here.
    You probably have about 12 months left before you need to look at locking in long(er) term fixed borrowing rates. Just follow the 2, 5 and 10 year bond markets for early indications of when fixed rates will be going up. and at what point in the yield curve

  • Can't really go wrong right now, we're not going negative and i don't think runaway inflation is on the horizon even if we did dilute our economy a sh1t tonne.

    Lock in a 1.xx% rate now and rate fluctuation for the next 3 years will not be an issue.

    Having said that, house prices aren't going anywhere too soon with immigration shut down. We're headed the same way as Japan some 10 years ago (that is stagnation).

  • If anyone knows the exact answer to this question they can make a shitload of money by buying or shorting ultra long term bonds.

  • With China's economy expected (and is) slowing and the US to follow i don't expect rates to rise and if anything they may fall ,
    I think we will follow Europe (ECB) and go into negative rates. Expect a decent market correction later this year , house prices to plateau and then go lower . Back to a little normality.

  • Thanks All. decided to get it fixed for 1 year 🍺: :)

  • I'm expecting rates to move on up and indications from the market and longer term fixed rates are they already are. Don't pay any attention to the RBA who will continue to do nothing but don't have the influence many think they do.

  • As a mortgage broker I think the better question is ''which side am am i exposed to more risk on?''

    It seems more likely that rates will go up rather than go down if you study what lenders are doing and what the economy is suggesting (Inflation, RBA etc) and there is much more room for them to increase rather than decrease.

    If the goal is building wealth, can you really go wrong locking something in at 1.##% for 2-3 years and just focus on investing to make 5% to 7% returns elsewhere?

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