Being an Aussie mortgage holder right now is not easy! Not only due the changes in rates and increased pricing, but the emotional rollercoaster of not knowing what to do next.
I pinned a blog in 2022 saying you are too late to fix.
This was when the fixed rates were creeping towards the high 4’s, and you could lock in for 2-3 years. The risk to pay more from day one in the hope that rates blasted past the fixed rates to recover your overspend at the time was too severe. It turns out you would have come close to breaking even. So here we are again, It's time to revisit that topic, but with a new twist for 2023.
The landscape has shifted, and we need to navigate carefully, so we don't fix too early. Yes, you heard it right! Here's the deal: the banks are getting ready to lock horns in a "fixed rate" price war that's set to rage from about now until the end of 2023.
How do we know this?
· Variable rate pricing discounts are disappearing,
· Cash back offers are being stripped from the market
· Fixed rate offers for “3 YEARS” (keep that in mind) are now advertised below a lot of variable rate offers.
But before you jump on the fixed rate bandwagon, hold your horses. We expect these fixed rates to continue to drop before the variable rates do, as we move towards the end of 2023. In fact, the fate of the variable rate market won't truly be clear until we are a lot closer to the new year.
So, where does this leave you?
Well, it's pretty simple. If you stick with your variable rate, you're in the driver's seat. You'll have the luxury of time, allowing you to wait and watch as the fixed rates lower. This means you won't get stuck with a high rate for a three-year term. Imagine paying 5.25% until 2026!! You have just gone through all of that pain to extend it by a further 3 years.
In this rapidly changing financial environment, flexibility is key. Staying variable gives you just that – the flexibility to adapt and make the best decision for your circumstances.
Remember, we're in this together and I'll keep you updated with the latest twists and turns in the market. Until then, keep calm and stay variable.
Watch this space for more insights and feel free to drop me a line if you need any advice. After all, your home loan is one of the biggest financial commitments you'll ever make – it's vital to get it right where you can.