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Is your home loan rolling over this year? Here’s what you need to know

 

Along with the rise of inflation, interest rates are also predicted to continue to rise, meaning that those with a home loan will be feeling the squeeze in their budgets.

So far, the Reserve Bank has increased the OCR by only 0.75%, from 0.25% in Oct ‘21, to 1.00% just recently. Despite this, fixed rates have already increased as much as 2.0%.

Most of the banks’ economics teams are forecasting the OCR to lift as far as 3% by next year, but will fixed rates further increase in line with this anticipated change? Not likely, as most of this increase has already been absorbed in the current rate settings.

However, floating rates and one year rates may still have a way to increase.

 

Projected OCR (cash rates)

Bank Mar 22 (now) Sep 22 Mar 23 Sep 23
ANZ 1.00% 2.00%  2.75% 3.00%
Westpac 1.00% 2.00% 2.50% 3.00%

 

This is ANZs latest projected rates (please note that markets are very volatile currently, and are subject to constant change and review)

ANZ’s Forecasted Customer Rates

Fixed term Mar 22 (now) Sep 22 Mar 23 Sep 23
Floating rate  5.04% 6.20% 7.00% 7.20%
1 Yr fixed 3.90% 4.50% 4.90% 4.90%
2 Yr fixed 4.55% 4.90% 5.00% 5.00%
5 yr fixed  5.30% 5.30% 5.50% 5.50%

 

What does this mean for your household’s budget?

In light of these changing costs, for any upcoming fixed rate rollovers, your household probably does have more to consider this year, such as:

  • Is my focus this year simply about making my loan as affordable as possible as I navigate my way back to this ‘new normal?’
  • When my fixed rate mortgage rolls over this year, what are my repayments likely to look like?
  • For a more affordable refix option, should I consider breaking and refixing now, vs later in the year? Are there likely break costs to do this?
  • Are there other options to ‘soften the blow’ eg. interest only, extending the loan term, or refinancing onto more favourable terms?

What’s the best option for me?

Because your financial situation is unique, it’s important that you have the right team of professionals, asking the right questions, in order to advocate for you.

Our expert mortgage team can offer tailored advice that will help to minimise the impact interest rates will have on your finances – we are focused on getting the balance right between saving money and minimising overall interest costs, and affordability.

Get in touch with us today to book a free, no-obligation mortgage review.

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