Are you on a fixed rate? It's time to act

Homeowners on a fixed home loan should act now to get ready for anticipated rate rises.

Last year, the number of fixed rate loan applications were at an all-time high, this is due to borrowers taking advantage of record low interest rates in response to the pandemic. Those who took out these fixed rate loans need to start investigating their options as many are now coming or will be coming to an end with large financial impacts on borrowers.

$99 billion worth of fixed rate mortgages are ending in the second half of 2023 from Australia’s two biggest banks alone, Westpac and CBA.

As forecast by ANZ and Westpac, if the RBA cash rate rises another 1.25 percentage points to 3.85%, many of these fixed rate borrowers could be looking at revert rates of between 6 and 7%. That could mean an increase in repayments for the average household of over $20,000 annually.

If you are in this position, acting now can help relieve the stress associated with these potential rate rises from your fixed rate loan ending.

Here are a few ways you can prepare.

• Confirm when your fixed rate expiry is expected to occur.
• Work out what your likely new repayments will be and start putting away the difference into your redraw/offset account (if possible), a high interest savings account or make these higher repayments on your loan – some banks cap extra repayments, so make sure you check the T&Cs for your loan.
• Look at your spending habits and see where you can make cutbacks. Especially for those who currently can’t afford to make extra repayments straight away.
• Get in touch with your local mortgage broker to see what other lenders have to offer 2 months prior to your fixed rate expiry.

It’s a competitive market for lenders, and some are prepared to tighten rates for refinancers willing to make the switch.

If you have any questions regarding fixed rates or finding a better offer, our team is always here to help.

Find out more about refinancing.