Hello everyone, as our finance period comes to an end, we're exploring the possibility of refinancing.
I'm curious about your perspectives on the current interest rates:
Is it advisable to opt for a fixed rate, and if so, for what duration?
Are there expectations or predictions regarding a potential increase in interest rates over the next few months?
Thank you in advance for your input!
Trillions of new dollars are pumped into existing properties every year. A lot of people are confident they know the future. Policy makers are more invested in existing properties than the average person, so nothing will change any time soon.
Are there expectations or predictions regarding a potential increase in interest rates over the next few months?
This is above my pay grade. @Michele Bullock
Let me consult my crystal ball on the global economy for you…
There are predictions out the wazoo but mostly it's just trend analysis. Inflation is ticking downwards, so it's 50/50 on whether they'll keep increasing rates to accelerate that or are happy with where it is.
Fixed rates have a level of predicted increases/decreases already built into them, likely they're more favourable to the bank but you get the guarantee that you know what your repayments are. Hedging by splitting means you'll set middle of the road whatever happens. It comes down to your own finances as to whether you should fix or not, what you can afford, how much you're borrowing and how much time you have to pay it off.
Take a look at bond prices for the market consensus on the rate outlook. If you look at those graphs history you can see that opinions change pretty frequently.
In my experience, the banks add enough margin to fixed products so that it takes big changes for you to end up ahead, but presumably you have been on a good deal the last couple of years!
When I had a largish mortgage I slept better on a fixed rate, so that is also a consideration.
Take a look at bond prices for the market consensus on the rate outlook
Consensus changes pretty quickly.
2047 Australian government bond was like 5.3% yield in October now it down to like 4.9% in October people still thought rates are going to the moon.
Now the markets have put in almost 1% rate cut in the US by end of 2024.
Consensus changes pretty quickly.
He literally said that in the next sentence.
Wow thanks for the insight. You just had to get that in.
Just stick to variable
Can't lose. It is like the index funds of home loan rates.
My Broker has advised my wife and I to go variable for now. Moving from Westpac to ANZ on a 5.89% rate with a $2k cashback.
The application was put in a few days ago as we are also coming off our fixed rate period of 2.09%. We could've locked it in for 4 years at 1.99%, super regretting we didn't do it.
Moving from Westpac to ANZ on a 5.89% rate with a $2k cashback
Did the same thing and settled mid Oct. Paperwork was sorted back in Aug. Got $4k.
We could've locked it in for 4 years at 1.99%, super regretting we didn't do it.
Who would have known. The world could have gone down the gurgler and they could have been paying us to stay in our homes for a few more years
How are they offering 5.89%? I'd be keen to do this but the rate on the ANZ site is significantly higher. Does the 5.89% include the recent .25% increase?
How are they offering 5.89%? I'd be keen to do this but the rate on the ANZ site is significantly higher.
Broker rate? Not 100% sure if you can get it off the street.
If it's going to be a longer power outage than that I'll fire up the generator and piss off my neighbours.
Not yet, it will be next month. But every other bank will increase, so its about same same.
The advertised rates for all the big 4 are always miles off what they offer after their "VIP discount".
Is it advisable to opt for a fixed rate, and if so, for what duration?
I suggest you might listen to some podcasts (NAB Morning Call, Australia Money Cafe etc). Fact is nobody really knows where rates are going. Everyone pretends to because they got historical data to lean on. But if everyone can use that to tell the future then why is there so many mistakes made.
But then I am also the person that has about $750k of fixed home loans until 2% at different maturities between 2025 to 2027 but that is because banks actually believed in the RBA / BOE rubbish that rates will stay low. Before that I paid like 1.5% over variable due to a mistimed fix for 5 years. It wasn't skill it was a lucky game of chicken. Also made 5% on Australian government bonds buying at the lows during October but I did lose like $20k on paper with CSL from the top but that wasn't my entry price. I would say I'm a little bit better than monkey throwing darts at a board.
Are there expectations or predictions regarding a potential increase in interest rates over the next few months?
If you want to believe it the bond markets the US will cut rates by 1% which if you believe it means we will be cutting 1% too. Some commentators would like to have you believe RBA needs to go up further to catch up with the US central bank rates but the truth is: Australia is dependent on US / China economy, if either of them go into recession it doesn't matter where the RBA has rates Australia is stuffed.
Just go to Kmart. Little kid toilet training so need more under wear. Marked on the shelf $7. Scans at $5 and plenty of slacks at $4, kids t-shirts at $3. These were like $4 - $6 last summer because we've been stocking 1 size up all the time. People don't want you to believe it but not all is well with the economy.
Be careful a lot of market commentators are talking their own book (whatever business they are in they'll tell you what is profitable for them).
Agree we've been on life support for a few years now, the funny money is just covering it up like a shot of adrenaline.
Consider your finances. Fixing isn't only a tool to "beat the banks" but a tool to assist your budget. If you choose a variable, and rates subsequently rise another 1%, would you be comfortable with the repayments? If you can ride out fluctuations and could comfortably adjust for higher payments, then variable rates give more flexibility, including the ability to refinance elsewhere without paying break costs. A lot of fixed rates don't offer offset or the ability to make additional payments past a certain point so they're other things to consider.
If however you think that rate rises may cripple your budget, a fixed rate can offer peace of mind for the duration - although as some are finding now, coming OFF the fixed rate isn't a fun time when rates are so much higher.
Personally if I was going to fix, I'd look at fixing for only a year, and review after that.
No one knows the future. You can hedge your bets by splitting your loan, some fixed and some variable. YMMV.