Forget the fixed-rate cliff, Aussies locking in their home loans today risk altitude sickness.
Forget the fixed rate “cliff”, the now-common buzz phrase for the phenomenally steep aftermath faced by Aussies smart enough to sign set-interest contracts when rates were at COVID lows. Most mortgage holders have now either successfully scaled or – sadly – fallen down it.Just as they have done at this point in every previous interest-rate cycle, lenders are trying to lure borrowers with cheap fixed rates. Except that we are very possibly at the interest rate peak.
The thing is that this new pricing reflects growing confidence that the RBA’s next move will be down … and springboarding off what is happening with interest rates, lendersThough the first cut is unlikely to come this year, and Reserve Bank governor Michele Bullock keeps telling us there’s no near-term prospect, 44 per cent of respondents to Finder’s interest rate survey expect rates to be cut at the central bank’s first meeting back next year, in February.
It didn’t matter though … the poor people who had fixed had to pay astronomical rates for the remainder of their deal.Interest rate expectations can turn on the head of a pin. I just mentioned the GFC – but recall the Reserve slashing that took place on pandemic panic, all the way to an official 0.1 per cent.
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