How Many of You Are Really Feeling The Raise in The Interest Rates?

Dr-StrangeLove on 03/08/2022 - 22:45
Last edited 03/08/2022 - 22:45

I guess this question is mostly for home owners (investment/ppor/both)

I assume a lot of folks here own at least one home I’m hoping this resonates with some of you. We recently purchased our first home in the peak of high housing prices (not sure if that’s what it had been called from a long time now) but the raise in interest rates are really making me think of out decision to buy was wrong or should we have postponed it a little longer. We have been planning to buy a family home from quite sometime and it isn’t easy with the current craziness in the market. We purchased a $1.4 mil house with 88% lvr 4 months ago. Bank approved the loan and now we are feeling the heat. Monthly payments have gone up by $1500. It’s taking a toll on our mental health. Is anyone else in a similar boat? How are you handling yourself? Any suggestions how to cope considering more rate hikes?

Financial

Comments

  • down-under on 04/08/2022 - 17:42
    +1

    Monthly repayment has gone up by $42 for me. So far I’m kind of ok, just eat less cabbages.

    • DiscoJango on 04/08/2022 - 20:11
      +2

      $42 extra per month? you should be on news.com saying how that has basically crippled your life and its the governments fault…

  • pogichinoy on 04/08/2022 - 18:51
    +2

    Is anyone else in a similar boat?

    Yes. My repayments have gone up as well.

    How are you handling yourself?

    It's fine. I can take the hit and more. I've prepared for this. Why haven't you?

    Any suggestions how to cope considering more rate hikes?

    Change your lifestyle mate. It isn't rocket science. Can't handle the heat? Sell. You claim you can't? Yes you can.

  • Kenji2014 on 04/08/2022 - 18:56

    What about refinancing to another lender who offers a lower rate? I've just done mine. St George and Wespact also offered $4K and $3K cashback respectively to refinance to them T&C applied. Not sure if those offers are still available. Perhaps check them out. Good luck OP!

    • brendanm on 04/08/2022 - 21:46

      Op will be paying lmi.

      • RADICALIST on 05/08/2022 - 01:44
        +1

        Can't refinance when his home is losing value and has zero equity

  • gromit on 04/08/2022 - 19:00

    If just these few rises are causing you serious mental health toll I gotta ask, exactly what percentage interest rate did you calculate on when you took out the loan? surely you at least budgeted for 5-6%? I did my calculations at 7% back in January. while the number have shot up quick they have a bit to go yet and this was all well and truly expected, even without Russia/Ukraine we were looking at rising rates.

  • dmcneice on 04/08/2022 - 19:05

    Your not alone, we purchased at 90% LVR 1.35m in late January (just before the inflation talk really started). How's has gone up pretty much the same. Im constantly stressed about money now. Very hard to make up the excess funds when tax takes up so much of it. Hang in there mate.

    • brendanm on 04/08/2022 - 21:47
      +1

      when tax takes up so much of it

      What does tax have to do with your house payment?

      • Donaldhump on 04/08/2022 - 22:53

        think they are referring to their income.

        • brendanm on 07/08/2022 - 10:09
          -2

          The taxable portion is already known, it's not a surprise.

      • Randolph Duke on 07/08/2022 - 08:28
        +1

        It’s the governments fault, don’t ya know?

    • RADICALIST on 05/08/2022 - 01:43
      +4

      If you are stressed about money, you over borrowed and can't afford the repayments

  • Vote for Pedro on 04/08/2022 - 19:18

    I budgeted my house purchase based on a minimum 4.5% increase in rates.

    So basically ensured I could afford to service the loan if interest rates hit 6.5%.

    I could have bought a much more expensive house, and it was incredibly tempting to do so, but I’d be in unhappy territory now.

    Never fun giving the bank more money though. Means less in the offset.

  • bradl822 on 04/08/2022 - 19:25

    The wife is always talking about it, trust me I'm feeling it!

  • dvsbastard on 04/08/2022 - 19:49
    +1

    I feel bad for those who bought very recently as even with semi responsible budgeting they would not have had the chance to build the same safety net as those who took their loan 5+ years ago.

  • richrichie on 04/08/2022 - 19:55
    +1

    Banks did not let me borrow enough to afford anything that I wanted, so the interest rate increases hasn't really affected me.
    I went through a pre-approval at the end of last year before banks reduced everyone borrowing capacity, and still couldn't even get anything close to $1.2m.

    So, if the bank let OP borrow $1.2m 4months ago, I'd think their household income should be quite decent (I'm assuming around $160K-$200K at least)?
    And with that kind of income and current interest rate, shouldn't the repayment still within 50% of the household income?

    At what level / income ratio do people normally feel anxious? Asking for personal education to budget for future mortgage

    • brendanm on 04/08/2022 - 21:49
      +1

      still within 50% of the household income?

      At what level / income ratio do people normally feel anxious?

      You should feel pretty worried at 50% I'd imagine.

      • richrichie on 05/08/2022 - 10:38
        +1

        I guess that's true for family on lower pay bracket.

        But when income is >$150K, at 50% ratio shouldn't people still have about $4-5K or more per month after tax for daily spending?

        • capslock on 05/08/2022 - 10:51
          +2

          Not if you have an OzBargain addiction and can't help but buy lots of stuff just because they are cheap.

        • brendanm on 05/08/2022 - 10:57

          What? You likely have other living expenses that are also high. No way I would want 50% going to mortgage. My mortgage to after tax pay ratio is about 17% now.

          • richrichie on 05/08/2022 - 11:09

            @brendanm: Nice, that's impressive at 17% ratio. Would you mind sharing tips how you get to this point?
            Is it driven mostly by the income side or having a low mortgage (smaller house / getting into the market earlier/ different city / etc)?

            I agree, I wouldn't want 50% of my salary going to mortgage either.
            I was under the impression 30-35% are the norm these days given how expensive houses are.

            • brendanm on 05/08/2022 - 11:29

              @richrichie: Bought when my income was lower about 5 years ago. Bought somewhere that was cheap, but with great potential. Value has about doubled since then. Income has nearly doubled. Even at the time I purchased, the mortgage was cheaper than rent. I like not owing a million dollars, and knowing I won't have to work my ass off forever and a day.

    • gromit on 05/08/2022 - 08:49
      +1

      I would seriously hope their household income is well above the 200k mark with a 1.2m loan. at 5% that is 60k a year in interest alone (and remember that comes out after tax and you need to add on principal repayment to that as well).

      • richrichie on 05/08/2022 - 10:33

        P&I repayment at 5% for a $1.2m should be about $6.5K/month.
        $200K income split across two individuals should come to about ~$11.5K after tax.

        Is $5K/month net income in general not big enough for a family of 3?

        • gromit on 05/08/2022 - 10:51
          +1

          5% is at the bottom end of what interest rates will hit. P &I should be about $7k. So yes 4.5k a month left is certainly still ok at the moment, but you are in for serious lifestyle cutbacks and anything above 5% is serious mortgage stress.

  • DiscoJango on 04/08/2022 - 20:10

    The only people that are stressed are the ones foolish enough (like op) to not factor in any interest rate rises in their borrowing capacity.

    • idonotknowwhy on 05/08/2022 - 08:38
      +9

      Not true. I'm stressed reading these stories and I'm not even in the property market.

  • The J man on 04/08/2022 - 20:31
    +4

    Nope, not feeling the pinch as we locked in for 4 years at 1.98% when we bought early last year.

    Still have around 30 months to go in our fixed term, and by the time it expires I'm hoping to have a larger buffer built up to weather the impact of the increase.

    Monthly payments have gone up by $1500.

    Damn, that's almost my home loan repayment right there. Gotta be stressful, goodluck OP.

  • Herbse on 04/08/2022 - 20:42

    I want to know why the lean interest rates have gone up but my savings hasnt

  • CheapskateQueen on 04/08/2022 - 21:12
    +4

    I'm not meaning to be a bish but it's ppl that pushed their borrowing capacity to the absolute maximum based on record low interest rates that fuelled the sky high property prices and has now priced me out of anything I want.

    I never understood how just like that everyone out there somehow could afford 2mil properties. I can't have pity for anyone that lives their life on a best case scenario especially a fantastical one at that.

    Live cheap, no eating out, more free activities, more books/toys from the library for the kids and hello kmart clothes shopping. I mean, if selling isn't an option if you can't the repayments, then live cheap is the only option. Certainly shouldn't be planning for another kid atm.

  • Daddy Chill on 04/08/2022 - 22:02
    +3

    Hope things get better for everyone

  • Doobies on 04/08/2022 - 22:24
    -4

    crazy to think people say current interest rates are high. Knock out the last ridiculous last 9-10 years and the cash rate was average 4-5%, compared to 1.85% today. That's still less than half of historical rates! When I got my mortgage in 2011 I think I was paying just over 6% (cash rate was 4.25%).

    1.2 million on a first mortgage. The I want it now generation…

    • RADICALIST on 05/08/2022 - 01:40
      +11

      Was the average home 900k+ 10 years ago?

      • gromit on 05/08/2022 - 08:59

        What the average home cost 10 years ago makes no difference in how you calculate affordability. Anyone taking out a loan this year should have at least done their math on 6% interest rate and how it will affect them.

    • idonotknowwhy on 05/08/2022 - 08:37
      +14

      The I want it now generation…

      I doubt it. I think the mindset is "Houses always go up. I can't save up as fast as house prices are climbing. If I don't buy it now, I'll never be able to"

    • bakemon0 on 07/08/2022 - 11:11

      you can't blame the child for wanting something when the grown-ups are as responsible for giving the child said thing

  • spade16 on 04/08/2022 - 22:37
    +2

    I can sympathise with you, we have been looking to upgrade our PPOR for more then two years and the amount of pressure I was under to buy from my wife and family was insane. We came close and would have spent up to $1.5m but the thought of spending that much on a house just seemed crazy to me, I can’t imagine having a loan of that size and seeing interest rates go up

    I’m hoping for a few more rate rises to bring some sanity back to the market, would be good to actually buy a decent house for an affordable price!

    • Donaldhump on 04/08/2022 - 22:51

      best time yo upgrade will be in 2/3 years :)

      • santaclaus on 05/08/2022 - 18:02

        Are you sure in 2/3 years time? I heard that RBA will have to start cutting rates at the end of 2023 or early 2024. That's not enough time for significant drop in price (20% plus).
        i would like to see price drops so that our kids have a chance to buy their own house. But I don't see that will happen. There is always something that will save the house price.
        I'm not expecting those who bought recently to sell at a loss. But maybe those who have bought many years ago (20-30+ years), if they sell now, they can afford to sell for less than last year price and still make handsome profits overall.

        • greatlamp on 07/08/2022 - 07:47

          It's just rumours peddled by the real estate market. The RBA doesn't even know what the rate will be next month. If fuel prices don't drop inflation will continue, and rates will keep increasing.

          • muzzamo on 09/08/2022 - 10:27
            +2

            @greatlamp: Best place to look for interest rate predictions is the bond yield curve and interest rate futures market. That's where people are putting their money and careers on the line to make bets on where it will be.

  • Trying2SaveABuck on 04/08/2022 - 22:56
    +1

    i can afford the increases but i'd rather that money go into my offset account

    i didnt expect low interest rates to last forever but i didnt fix because of Lowes comments on no interest rate rises will 2024 so i 'felt' i had time but thats the way the cookie crumbles i guess

  • prinsenhof on 04/08/2022 - 23:27
    +1

    We are in a similar boat - home loan with 1 million remaining.

    Mentally I cope by flipping my thinking, every cent extra I put into my home loan is now earning me more money than before. Everything I buy now has a higher interest rate attached to it. The fact my money is going into servicing a debt means i'm no longer paying tax on that money (people earning interest on cash, give 30%+ back in income tax).

    Next month they raise the rate again, well that's another 0.5% you can earn by putting it straight into your loan.

    They took 10 years to lower the rates, I thought it would take at least 5-6 years to raise them to the same level again. They must need to bankrupt people and businesses, so hold on until they meet their quota, then they will stop raising the rates. Settle back into a routine once the rate stabilises and then you can take a break and budget for a holiday.

    You can even use the available balance on your loan to help with the holiday later once we know where the RBA is going to settle.

    Also - some banks will calculate your monthly repayments based off the original loan amount and term. They may not adjust for any extra money you have put in. This means that even though the monthly repayment has been jacked up - more may be going to the principal than before.

    • daft009 on 05/08/2022 - 00:28

      The thinking is they will lower rates mid ish next year

      • Randolph Duke on 07/08/2022 - 08:30
        +1

        *wishing

        • daft009 on 07/08/2022 - 09:22
          +2

          the futures market is already pricing it in.
          they were right about rates going up in 2022 & not 2024 like the RBA predicted.

  • duluxe2000 on 05/08/2022 - 00:57

    if you are holding a property for 30 years, expect interest rate goes up and down. Nobody can really time the market . Yes you bought at the peak but it's the peak so far…

    Banks normally assess loan with a buffer of 3% interest rate. So unless you were not honest on you application, you will be fine, just cut some spending.

    I cook at home more and feel it's healthier.

  • sathion on 05/08/2022 - 01:05
    +1

    Not yet, bought mine in 2019 at the higher end of our budget, we paid $469,000 for our place. Bank valued it at $900,000 a few months ago. Given the climate and rates at the time we tapped the equity a tiny bit to put some much needed renovations into it.

    Since that we've gone from $1400 per month to $1950 per month and with all the recent rises that will go to $2100ish per month. Which is fine, but we really only took on the equity after hearing the RBA wasn't going to raise the rates until 2024 multiple times. We are still within our household budget but it feels a bit shit to be lied to as we might not have tapped as much equity at the time.

    Part of our loan is locked at 2% until 2025 so not worried about that the other half was 2% but now 3.3%.

  • RADICALIST on 05/08/2022 - 01:35

    Bought 4 months ago at the peak property price, interest rates going up every month and house prices dropping. Ouch op ouch. Honestly what made you buy a 1.4mill house, keeping up with the joneses?

    I am so glad my mortgage is only 280k for my first home.

    • mr fox on 07/08/2022 - 12:42
      +2

      My home cost over 1.6m and it's nothing special. Not in a pretty area either. Welcome to south east suburbs of Melb. Nothing to do with the Jones, everything to do with living near family and work in an average family home.

  • Weezle on 05/08/2022 - 04:05

    First home buyer here.

    Bought Jan 2022.

    Loan amount roughly $480K, but I just received a $20K pay rise so personally I will be able to weather the storm and I have sufficient savings/emergency already. But I am feeling the cost of living pressure, especially food and groceries.

    • Mr Random on 08/08/2022 - 11:07

      I read your comment thinking to myself, "when did I post this???".
      Exact same boat, down to the loan amount, and pay rise amount. I was just a few months earlier to the market.

  • jellykingdom on 05/08/2022 - 05:54
    -2

    Surprised that no-one has suggested it… Refinance your loan

    I mean you SHOULD have fixed your loan, or at least a portion of it. Not sure why you didn't do that, maybe inexperienced

    But now, assuming the bank will let you, refinance to Interest Only. Gives a breather on paying down the Principal. Your interest rate is higher but your repayments will be lower. I don't know what the criteria is for this tho, maybe they won't let you in this market or with your risk profile? Not sure

    If not, see if you can change to some mob with lower rate and/or refinancing bonus. It'll help at least

    • Randolph Duke on 07/08/2022 - 08:31

      OP bought recently, fixed rates were already high by then.

      • jellykingdom on 07/08/2022 - 09:21

        Oh yes, I forgot he said that. Even 4mo ago I'm not sure if they were terrible, but yes point conceded. In April when they bought, the cashrate was still at the bottom of the curve, not sure what the fixed rate options were at the time

        Not sure why I got negged for suggesting Interest Only…seems like a totally logical option for now

        • Syrex-13 on 07/08/2022 - 10:36

          Wasn’t me, but might have been related to the refinancing comment.
          OP bought at an LVR of 88%. It’s quite conceivable that the value of the house has since decreased due to rising interest rates.

          No way to refinance without incurring LMI

  • mrvaluepack on 05/08/2022 - 07:27

    88% LVR? Ooooo ouch…

    You will definitely feel the pinch because thats what the RBA wants to happen. Borrowing costs more so that you reduce spending on other items to reduce demand which hopefully reduces inflation.

  • idonotknowwhy on 05/08/2022 - 08:33

    I'm not in the property market, not giving financial advice, and not all that smart. But here's what I would consider in your situation:

    What's your interest rate and monthly repayment right now?
    What's the highest monthly repayment you can afford with some moderate lifestyle adjustments?
    Have a look at the predictions from banks/analysts about where the interest rates are heading.

    Can you service the loan at the predicted rates?
    If yes, I'd do what i can to put aside more money now and keep the house.
    If no, sell the house asap, proably for a loss. As it's better than selling it/having the bank dump it when I can't service the loan later.

    I've sold shares (microcap high risk companies) for a loss before when I think the company is (profanity). And it's been better than losing more as the price gets dumped.

    Goodluck

  • Tiredman on 05/08/2022 - 09:16

    No loans right now so doesn't affect me. Hope for property prices to drop a bit before going shopping.

  • DingoBilly on 05/08/2022 - 09:49

    I have 2 investment properties, total of about $600,000 debt, no partner or anything just on myself.

    I haven't felt the effects at all in any noticeable way. But I have a fair amount of savings, a good job and didn't borrow more than I could - it's an increase for me but nothing I'd worry about. I think it would need to hit 10% or similar for me to start worrying/causing me to not be able to put away savings.

    I realize and am thankful for being in a privileged position, but I can't help wonder how people borrow so much that they can't afford a small increase in interest rates. Seems very short-sighted.

  • Zacsik on 05/08/2022 - 10:20

    Yeah, I am definitely feeling it too. Bought a house for 900k in December. Admittedly, I had about 300k in offset at my now investment property. So I have 900k across two properties, and the rental is almost positively geared.

    Still, am thinking of selling a 100k in shares, taking the capital loss as putting it against the offset for the 600k loan on my PPOR.

    What are peoples thoughts? Should I ride out the share market goes up a little more and not have the capital loss or should I sell now?

    • YLD1 on 05/08/2022 - 11:58
      +2

      ride it out to 2024 and then sell

      It might get worse before it gets better but stay strong

      • ledeviousone on 08/08/2022 - 15:22

        Interest rates and inflation will be topping out by May 2024.. which equals to the lowest house prices and a new high in precious metal spot prices. Selling properties low and Buying high… the AUSTRALIAN WAY!

    • Donaldhump on 05/08/2022 - 13:23
      +1

      I bleieve, you shoukd have borrowed money for your shares and claim the interest on it on tax, and instead use the actual money you have to offset your loan.

      but since you are already the way you are how much loss have you made?

      • Zacsik on 05/08/2022 - 13:35

        Not much, like 8k.

        I think I'll sell them and carry the capital loss for some of my other investments when I cash them out in the hopefully more optimistic future.

        I'd set it up like this since I'd already paid off my one bedroom I was living in - and chose to invest instead leaving it in a bank account.

        Circumstances changed, I wanted a house and I bought one.

        • Donaldhump on 05/08/2022 - 14:18
          +1

          tough call, but maybe better off just selling and offsetting

  • OzzyOzbourne on 05/08/2022 - 11:46

    Fixed last year for 3 years

  • Chong on 05/08/2022 - 12:50
    +1

    Cut what you can…

    easiests are:
    no more eating out, takeaways… cook extra when cooking and pack for another meal or 2 for quick meals
    drinks from outside should be cut, coffees (except maybe the 7/11 ones, i dont drink coffee so maybe someone else can chip in), bubble tea
    any recurring activities that cost money (especially for kids) should probably be cut, unless absolutely essential

    harder:
    finding another job on the weekend, one of you can do an extra shift of work (got to figure out whether it is worth it tax wise)
    reselling old stuff you haven't used for awhile

  • lainey13 on 05/08/2022 - 13:08

    Good old disappearing user… Either they got some good advice and feel better therefore haven't bothered to answer or they got so scared they're crying in the corner!

  • surg3on on 05/08/2022 - 13:35

    The bank assessed your ability to pay with the loan rate at somewhere around 5.5%. While it may be uncomfortable i am confident you can can pay at that level (unless you fibbed on application)

  • Hoborg on 05/08/2022 - 14:18
    +6

    To answer your question:
    My mortgage is $1.2m (taken out may last year - ~75% LVR at the time), $400k fixed, $800k variable. A decent amount in offset account for the variable

    I've factored in mortgage rates to go to 8%. Beyond that, we'd cut some expenses (roughly $20k/yr discretionary up for grabs), sell some investments or at worst, the wife would go back to work (Stay at home mum at the moment)
    I also have a lot in offsets at the moment as a result of selling some investments. That would fund out lifestyle and mortgage for at least ~2 years.

    As for your thinking - forget the past and 'buying at peak'. So many people argued prices were at peak since the GFC - who really knows what's going to happen in macro terms… for all we know, the world goes into recession next year, inflation pulls back and we go back to an 'emergency' cash rate.

    You are where you are, do what you can now. Unemployment is stupidly low, it's hard to find good labour. Leverage this, negotiate better pay with your current employer or look at new opportunites. I did this about 6 months ago, negotiated a 20% rate increase on my contract.

    Further, negotiate the big stuff. Food, transport and housing:
    - Get a better mortgage rate if possible
    - Go down to 1 car, or downgrade any luxury cars (put balance on your loan)
    - Don't eat out, adjust grocery spend as necessary
    Don't get bogged down in the crappy details where you'll save $10/week but requires a lot of effort.

    Finally, you can increase income through other means (second job, etc). That would depend on appetite for more work and what your skillsets are…

  • nomoneynoproblems on 05/08/2022 - 14:47

    To get that loan OP and their spouse would be making well over $200k combined income. Something tells me they will be fine.

    Source: I may or may not work in a bank you probably heard of.

    • slowmo on 05/08/2022 - 14:52

      even if they are earning 200k each, if they are leveraged to their eyeballs, they are not going to have a good time.

      of course, it just means they can recover faster than the average people if they can sacrifice the very reason that caused them to be over leveraged …

      i dont think it will become a bad situation like those folks who lost homes in floods multiple times.

  • [Deactivated] on 05/08/2022 - 15:09
    +1

    Finally, I am getting some interest on my savings instead of subsidising the government printing presses, banking and construction industries.

  • lunartemis on 05/08/2022 - 15:30
    +1

    $1500 increase?? That's more than what we pay for our monthly mortgage repayment. We locked to 1.89% last year for 3 years

  • d-hunterz on 05/08/2022 - 15:38

    We all feel it OP, yet some don't agree to it. My 2 cents below-

    Do you really love the property ( Planned to stay for long if not forever) - Yes, then cut your spending's as much as you can, still hang out watch movies etc. Keep on paying the P&I till you can and if $hit goes out of control, switch to interest only. Hopefully. in 2-3 years bumpy road would have been patched up and ready for a smooth ride.

    But, if you are really struggling ATM then selling the property might be a good idea as this is the new normal(4-6% home loan interest) for short future.

  • Viper8 on 05/08/2022 - 16:16

    Zero pain. Honestly don't notice it at all.
    18 months ago when purchasing new cars and buying a bigger house we anticipated a cash rate increase of 2.5 - 3.0% to occur during 2022 - 2023.
    Unfortunately many people maxed out their available debt during a temporary period of unprecedented low interest rates. Part of the reason why the price of assets sky-rocketed.

    Just wait for when the recession kicks in from next year once the temporary spike in inflation passes.
    If you have adequate savings and are able to meet expenses after taking a pay cut in the event you get made redundant then there's nothing to worry about.

  • unhuman on 05/08/2022 - 17:55
    +1

    4 months ago, fixed rates were 2%. Why would someone not lock in 2% rates. It’s just no brainer.
    1500 dollars is not big a deal if you can afford to pay mortgage on 1.4 million home. Substantially, one or both of you needs to be making 200k plus.

    • matt-ozb on 05/08/2022 - 19:08

      late last year … 2 salaries at about $160K excl super with 2 dependents could borrow about $1.4M.

      • unhuman on 06/08/2022 - 10:02
        +1

        Man that’s just money grab. 160k is nowhere repayment income for 1.2 million loan. If you pay more than 30% of your after tax income to mortgage , you gonna be struggling. Rates could increase another 1%. A guy making 160k should have a mortgage repayment of 3500 aud max per month.

        • UFO on 06/08/2022 - 19:45

          "Rates could increase another 1%"??

          Please tell me you're joking? It's a CERTAINTY that rates will be at least 1% by this time next year. Even more. 1% is nothing… there is more pain ahead than people realise.

          • unhuman on 06/08/2022 - 22:35

            @UFO: Current rate for fixed is around 5%, it could increase 1% more to 6%. I don’t expect rates getting more than that Unless there’s a major war, or something much bigger than covid.
            P.s there’s no joke. 2015, rates were 5%. It’s just normal.

            • UFO on 06/08/2022 - 23:13

              @unhuman: World was a different place 7 years ago man. No way things are settling down any time soon, inflation is rampant all over the world. The only way the financial system knows how to curb inflation is interest rates. They'll be at least 1% more than current rates within 12 months, and further increases of at 1% every 12 months after. 5%… and then 6% will be in your rear-vision mirror before you know it.

              • unhuman on 08/08/2022 - 23:14

                @UFO: Hmm.. we are not in the same world as before. Rates gonna go up but not more than 7% and that’s stretching too much so max rate increase in 1% more in September . I remember the times when parents were paying 18% but back then one wage would be enough to buy a decent home.

  • George2021 on 05/08/2022 - 19:14
    +1

    I remember when people were advised to pretend interest rates hit 10% and then see if you can afford the loan, and that was only only 10 years ago. Interests have only begun to climb, they have a long way to go.

  • No ONE on 05/08/2022 - 19:33

    Enjoying the interest rate raise.

  • Adz81 on 05/08/2022 - 19:45

    Up to $107/week from $99/week.
    Managing to make do so far.

  • Jikx on 05/08/2022 - 20:51

    Are we two peas in a pod OP?
    I'm in a similar situation and similar loan and LVR.
    I have no additional suggestions besides I literally feel your pain and lack of sleep.

  • kl2999 on 05/08/2022 - 21:08

    Lucky I fixed majority portion of the mortgage at 1.88%. Finish next year.

  • BartholemewH on 05/08/2022 - 21:12

    We bought well and truly within our means in regional NSW approx. 10 years ago. I have no idea what the minimum repayment is on my loan because I've always paid a fixed amount well above that. Our house may still not be worth a $Mil a decade later, but if you buy into the Syd/Melb lifestyle, you get the stellar upside and take the risk on any downside.

  • KLoNe on 05/08/2022 - 21:20
    +1

    Why did you buy a house you couldn't afford?

  • echelon6 on 05/08/2022 - 21:48

    I certainly am. My property portfolio used to make 100k passive. Now close to 0

  • Makaveli99 on 05/08/2022 - 22:05
    +2

    Change to internet only (instead of P&I) & with extra money you save you can add to loan offset/redraw. this would be short term but if you adding a lot of offset & later on you can pay into loan & reduced loan principle & lower LVR (lowering LVR cam be useful for later refinancing).

    • od810 on 05/08/2022 - 22:45
      +1

      Not sure you can do that given the property is in negative equity. If you switch to IO, it is another loan application. Yes it might help the cashflow, IO loans usually have higher rate, i dont know if OP actually has LMI or not

      • Makaveli99 on 05/08/2022 - 23:18
        +1

        Yup agree. I don’t know their circumstances. If loan on variable u can ask your bank to switch to interest only without whole loan application process. Not sure about all banks but iv done it before but was in better circumstance etc

      • duchy on 06/08/2022 - 23:30

        You just ask your bank. Even with a bit higher rate, the cashflow should get them over the worst period.

  • Alexxx on 05/08/2022 - 22:24

    How to cope, get refinancing cashback to help you out. Read this thread for inspiration https://forums.whirlpool.net.au/archive/988ly85j

    I went to my bank in June to see what they could do and they wouldn't budge at all. Did an application with St George to get $4k cashback and within 2 weeks I had a call from the the retentions team offering me cashback and a better rate to stay which I accepted. I'll probably try doing the same thing at the end of the year to see what I can get.

    • Syrex-13 on 07/08/2022 - 10:48
      +2

      Given it’s fairly likely the OP would be liable for LMI, a 4k bonus doesn’t exactly offset the LMI of $21k +

      • Maxdax on 07/08/2022 - 22:02

        Who says he is moving ? Alexx didn’t move

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