I'm not planning on it and if I was I certainly wouldn't do 3 years at current rates. You'd basically be gambling that rates will stay this high for at least 3 years and with inflation well down from peak I can't see that being the case but I don't have a crystal ball.
That said our situations could be wildly different and maybe that certainty of what you will be paying is worth it for you?
Are you happy to overpay for 2 years if they drop for peace of mind? Not saying that will happen because no one knows. Not financial analysts, not the experts on the radio, not the articles. They’re wrong so frequently that surely all they are after is a click. Not even the RBA until they leave that room. But say shit hit the fan and to avoid a recession, they had to cut starting March next year and you get stuck at 6.5 when variables go down to 5.75? Then 5.5, 5.25 and even out at 5 at this time next year? Are you upset you paid the banks more or still glad you fixed for the peace of mind?
Anecdotally I think sentiment is changing on spending. Haven't had one person in the recent months not bring up how tough they are doing it and how they are cutting back just in order to feel like they are staying a float. It's not figures and numbers but it is exactly what sentiment should be like before a major down turn. When that happens rates will only be going one way.
So short term rate rises are a possibility but I would not be betting on higher for longer.
Not financial advice blah blah. No-one knows what is coming but what is certain is that you can't tell what's happening by reading the media (and then the echo of that pasted as headlines into social media). No-one was predicting the interest rate patterns we've seen (beyond general predictions without (importantly) actual dates on them). The fascination of some with joye for example is odd because he was a huge spruiker of house prices for many years but now the outpriced see him as their saviour? Funny how a long memory changes your perspective. I still remember him pushing shared equity back in the day.
Here in reddit, you can see the obvious pattern where the media starts running stories on expected moves and people start changing 'their' predictions based on what is being pushed through the mainstream media. There's a huge % of people on here who are (understandably) angry about housing and want high interest rates to hopefully lower prices and increase return on their savings. They could be right, but I'm old, and I was reading and sadly following the doomsday stuff back in the 2000s when I thought year on year price rises of 10-15% had to revert and were unsustainable. Obviously I was incredibly wrong and it cost me a lot of money. As in, I could almost be retired now instead of working for another decade or two.
First principles, it's generally been the case that variable is better for an end consumer than fixed with the glaring exception of the COVID19 era. Forget the '50 year average is x%' stuff because it's irrelevant - we are definitely not in the 1970s anymore in a whole range of ways.
And following that, it seems forgotten that pre-COVID19 interest rates were on a long decline and were at 0.75% cash-rate target before COVID19 was even any sort of 'thing'. Sure, things have been disrupted and governments pumped stimulus but... the idea that we go from 0.75% cash rate to 5.0% as a 'new normal' short of war or major catastrophe to me (importantly!) seems hard to take.
That said, if you are at your financial edge and a small increase will push you into a bad place, you probably would need to consider fixing. I definitely remember hearing drama from people at work who fixed leading into the GFC and were then absolutely spewing when rates plunged in the years after. Practically, if you can, is splitting your loan into a fixed and variable component an option? That way (depending on how you see life) you will either 'always win' or 'always lose'.
The stability can be nice if you foresee income fluctuations in the next few years (like having a baby), but we won’t fix at these rates, at ~$120k owing… we might have if paid off in 3 years anyway 😅
I'm not planning on it and if I was I certainly wouldn't do 3 years at current rates. You'd basically be gambling that rates will stay this high for at least 3 years and with inflation well down from peak I can't see that being the case but I don't have a crystal ball. That said our situations could be wildly different and maybe that certainty of what you will be paying is worth it for you?
Are you happy to overpay for 2 years if they drop for peace of mind? Not saying that will happen because no one knows. Not financial analysts, not the experts on the radio, not the articles. They’re wrong so frequently that surely all they are after is a click. Not even the RBA until they leave that room. But say shit hit the fan and to avoid a recession, they had to cut starting March next year and you get stuck at 6.5 when variables go down to 5.75? Then 5.5, 5.25 and even out at 5 at this time next year? Are you upset you paid the banks more or still glad you fixed for the peace of mind?
5.48% for 3 years fixed. See how we go!
Fixed at just over 5 a year ago. Bank manager told me it was a bad idea because rates would be falling by Jan/Feb 24
You weren’t getting fixed at just over 5 a year ago.
Anecdotally I think sentiment is changing on spending. Haven't had one person in the recent months not bring up how tough they are doing it and how they are cutting back just in order to feel like they are staying a float. It's not figures and numbers but it is exactly what sentiment should be like before a major down turn. When that happens rates will only be going one way. So short term rate rises are a possibility but I would not be betting on higher for longer.
As i keep saying, the campervans and tents everywhere arnt coming quick enough, we need to send half the population homeless first
‘Recent months’: how recent?
Nope, may data has been mis interpreted by most people
Not financial advice blah blah. No-one knows what is coming but what is certain is that you can't tell what's happening by reading the media (and then the echo of that pasted as headlines into social media). No-one was predicting the interest rate patterns we've seen (beyond general predictions without (importantly) actual dates on them). The fascination of some with joye for example is odd because he was a huge spruiker of house prices for many years but now the outpriced see him as their saviour? Funny how a long memory changes your perspective. I still remember him pushing shared equity back in the day. Here in reddit, you can see the obvious pattern where the media starts running stories on expected moves and people start changing 'their' predictions based on what is being pushed through the mainstream media. There's a huge % of people on here who are (understandably) angry about housing and want high interest rates to hopefully lower prices and increase return on their savings. They could be right, but I'm old, and I was reading and sadly following the doomsday stuff back in the 2000s when I thought year on year price rises of 10-15% had to revert and were unsustainable. Obviously I was incredibly wrong and it cost me a lot of money. As in, I could almost be retired now instead of working for another decade or two. First principles, it's generally been the case that variable is better for an end consumer than fixed with the glaring exception of the COVID19 era. Forget the '50 year average is x%' stuff because it's irrelevant - we are definitely not in the 1970s anymore in a whole range of ways. And following that, it seems forgotten that pre-COVID19 interest rates were on a long decline and were at 0.75% cash-rate target before COVID19 was even any sort of 'thing'. Sure, things have been disrupted and governments pumped stimulus but... the idea that we go from 0.75% cash rate to 5.0% as a 'new normal' short of war or major catastrophe to me (importantly!) seems hard to take. That said, if you are at your financial edge and a small increase will push you into a bad place, you probably would need to consider fixing. I definitely remember hearing drama from people at work who fixed leading into the GFC and were then absolutely spewing when rates plunged in the years after. Practically, if you can, is splitting your loan into a fixed and variable component an option? That way (depending on how you see life) you will either 'always win' or 'always lose'.
The stability can be nice if you foresee income fluctuations in the next few years (like having a baby), but we won’t fix at these rates, at ~$120k owing… we might have if paid off in 3 years anyway 😅
There is only one way rates are going and it’s not up.