It has been very well reported that many
mortgage holders will soon be paying much higher interest rates when their
fixed rate terms expire.
It is estimated that $478 billion worth
of fixed-rate mortgages is due to expire in 2023.
In addition, borrowers may also have to
navigate the end of an interest-only term, which typically applies to
This blog sets out our advice on how to
navigate these changes.
What are your options?
If your fixed rate is
maturing, you have two options.
You can re-fix your
interest rate for another term or allow the interest rate to roll over onto a
Current fixed rates range
between 5.39% and 6.10% p.a. for owner-occupiers and 5.69% to 6.70% p.a. for
investors (terms between 2 and 5 years).
Variable interest rates
range between 4.75% to 4.90% p.a. for owner-occupiers and 5.30% to 5.50% p.a.
for investors on interest-only repayments.
As such, fixed rates don’t
look attractive for a couple of reasons.
Firstly, it is very likely
that we are at or close to the top of the interest rate cycle.
So, there’s limited value
in paying a premium (i.e., a higher interest rate) to protect yourself against
potentially higher interest rates in the future.
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Tuesday, 28 March 2023