I'm sure I'm like many others who's wonderful, low percentage fixed rate mortgage is coming to an end soon. Our rate (for the majority of the loan) is 1.99% and this will revert to 4.94% (based on current number anyway!). We are with ANZ.
Just wondering if anyone has specific plans for their mortgage once their fixed rate ends?
Speaking to your current lender for a reduction?
Switching to get a better rate?
Switching to get a cashback of some form?
Looking to fix with someone else?
Thanks
4.94% - are you sure thats the rate for existing customers or only new? I think it will be closer to 6%.
OP won't have a slight chance to obtain this rate as an existing ANZ customer unless with a $1.5m+ mortgage, great negotiation skill and luck.
Effective 16 December 2022
ANZ Standard Variable Home Loan @ 7.39% p.a.
ANZ Simplicity PLUS Home Loan @ 6.74% p.a.
ANZ Standard Variable Investment Property @ 7.99% p.a.
Ouch!
The headline rates are a stupidity tax. OP can sill easily get <5%. The above comments are simply incorrect.
Speak to your favourite mortgage broker. There's plenty of us on Ozb if you don't already have one. 4.94% isn't bad but there's better with cashback depending on your circumstance
Refinance and get the cashback.
Plan ahead, you might need to sell if you cannot get refinancing.
If that is the case, better to sell now or at least put it up for sale. You can cancel later and pay for the sign and a small fee if you can refinance.
OP might be able to afford the rate rise though
Just wondering if anyone has specific plans for their mortgage once their fixed rate ends?
Not have a high mortgage balance that makes repayment unaffordable
At what rate did you budget for in the long term?
Speaking to your current lender for a reduction?
Of course. But are you also prepared for further increases in Feb and down the track?
Speak to your lender, shop around, refinance if you have to…etc. We live in an age where information is at everyone's fingertips, it takes you seconds to figure out what competitors are offering.
Doesn't make much sense to be fixing now, the potential upside for rates is quite small, but potential downside is quite large. I won't forecast rates (I am a macroeconomist FWIW), but just a general understanding of the economy suggests that certain central banks (particularly the Fed) have been far too aggressive with rate hikes and that inflationary pressures were much more transient than first thought (driven by non-structural factors, e.g. supply chain delays) which will now be alleviated particularly with China opening up. My sense is that people (more broadly) will not accept this sluggish economy for longer and at some point in the near future (within the next year), there will be significant pressure to cut rates.
inflationary pressures were much more transient than first thought
J Powell said this a lot in 2021 before the rates went up though? I recall seeing in the news that the Fed and other central banks thought that inflation would be transient in nature, up until they started to raise rates. This was repeated a lot before rates went up. It was like they couldn't handle the truth and wished it was transient in nature. Here is an article about it. That was published in December 2021 and the Fed started raising rates three months later.
I don't know if anyone can assert it's all down to supply chain issues, from what I've read it could also be simply due to corporate greed hidden behind a guise of supply chain problems, and that wouldn't really surprise me. I'm not saying all companies are doing this, but I think some out there definitely are, because some people are just wired to be greedy and do the wrong thing by others.
people (more broadly) will not accept this sluggish economy for longer
I think most people will be more fed up about COL than a slow economy. We've opened up, everyone thinks COVID-19 is over, if anything I think signs point to the economy going steady, and then when the lag effect of high rates kicks in things will go south. Sure, rates are higher already but there are most likely people out there with a good savings buffer who can use that to pay off their higher repayments. Once these buffers decrease and are emptied then people will need to look for a second job, start an OnlyFans, rob a bank etc. to make their repayments. It's possible this is already happening with families that are starting to feel the pinch. If people start losing their jobs or unemployment increases, then people will care about a "sluggish economy" because they won't be able to get a job, small businesses will see less patronage etc.
Last I heard the outbreak in China is intense and hospitals are overwhelmed, I don't think that because they're seemingly starting to abandon their COVID zero policies that supply chains there will improve anytime soon.
Honestly I'll be happy if prices go down, but if they don't go back to 2019 levels plus a few percentage points or whatever (i.e. regress to the mean) I won't be surprised. E.g. Milk used to be $1/L, it's now $1.5/L, it'll go to $1.20/L instead of $1/L or $1.10/L.
there will be significant pressure to cut rates.
I think the main reason we will have to cut rates is because we have one of the highest household debt ratios on the planet, largely due to mortgages, so we are extremely sensitive to rate rises. I would say interest rates are inversely related to people's understanding of how much a dollar is worth, so as rates go down, people think that $100,000 or $500,000 or $1,000,000 are not really large sums of money.
I actually would not be surprised if the government jumped in and kicked up some program like "Home Saver" where they give people money to pay off their mortgages.
Reply blew out in length, not expecting you to acknowledge it all, I just enjoy thinking about this.
Except in the US, where lowest paid employees got a bit of a break, there has been little wage inflation, the driver of “problem” inflation.
Transient supply issues and corporate greed can contribute, but both will be short term (I.e. a year, not a decade).
If Woolies keep charging a lot for meat or fruit, that opens the door for a local butcher or f& market. Or ALDI, or others to compete.
Competition isn’t dead.
And we are already seeing moderating inflation - latest US figures had prices falling.
You can see it here in seasonal produce, but I will acknowledge corp greed in a lot,of shelf items.
Competition will fix that soon enough.
Bottom line is rates won’t go up significantly more, or if they do will fall again swiftly.
I am also in same situation as Op and has been offered 4.94% by ANZ.
Has anyone here been able to match other bank rate and also get cashback as retention offer?
I read somewhere that Govt will double the amount immigrants this year from ~160K to over 300K.
Solution:
Your family lives in one bedroom and then you rent out the rest of your bedrooms putting a family in each, also should be able to sheet off the lounge/dining areas for even more families. That should easily cover the mortgage payments; with the by-product of Australia now being exactly like the countries immigrants are fleeing.
Wrong.
"the government has decided to lift its permanent migration program from 160,000 to 195,000 in 2022-23".
So you can pay off your mortgage swiftly and then have a home for yourself?
Lots of families in Australia have rented out a spare room or granny flat to help make ends meet as long as Australia has been a country.
And lots of families of new Australians got their start thanks to less costly housing like that.
Maybe don’t buy a house with lots of spare bedrooms and large living areas if you can’t afford a mortgage?
Hi all, thanks for the replies. Just to be clear, this isn't a "I can't afford the new rates, what should I do?!?" post….I don't have any issues with paying it off and had always assumed the rates would revert back to around the 5% mark anyway. I was more just seeing what others thoughts/plans were.
Re the 4.94%, yes, it is correct. It is what I am paying currently on a smaller portion (around 10%) and have been told the rest of the loan will just convert to this rate also. Looking around, it doesn't feel like I would be overpaying substantially, or missing out on a big discount at another bank, however I had considered moving around to a new bank or two over the next year if I can get a $3000+ sign up bonus…. fortunately we are only sitting on around 60% LVR so refinancing shouldn't be too much of an issue….
(Edit, and yes, headline rates are ridiculous and should really be illegal at this point….)
I was more just seeing what others thoughts/plans were.
Thought of what? Your loan becoming variable 4.94% from being fixed is really not a big deal, especially you can still afford it.
Depending on your balance, be it IP or PPOR, you would regularly look for a better deal and sweeteners anyways.
So what do you expect people’s thought be?
Your intent is still not clear to me sorry.
Will be 8% soon.
I look forward to the $1m mortgages people have suddenly having to sell up then lol
I am in a similar situation as well (with rams). once the low fixed rate expires (2.09%), it will increase to 5.74% variable (ouch!). I am looking at difference refinance options with better rates but for the time being, I think I will try to make the most of the off set account and transfer as much funds as I can to that account to reduce the repayments.
Also changing from monthly to weekly repayments will help reduce repayments (if you haven't done so).
Refinance