Home loan interest rate bottomed out in Australia?

Hi All,

Looking for opinions on current home loan interest rate in Australia.

Has the interested rate bottomed out or is there any further downgrades expected. I understand it is difficult to predict as it depends on various domestic and global factors.

I have bought a land and started construction, so was in a dilemma to lock the rate for couple of years as rates are quite attractive for first home buyers.

NAb is 3.69 for 2 years and Anz is 3.88.

Who has a crystal ball.... Sorry thats not helpful.
What we are seeing is a bit of a yoyo - rates go up, then down, then up, then down based on internal policy changes and the lenders current limits in terms of investment or interest only loans.

There's a lot more appetite for owner occupied P&I loans (loans that are being paid down) and we are seeing this in some fixed rate discounting coming out at the moment (even better than those). Banks rarely lose on those so it suggests rates are staying low with the exception of policy changes.

You'l struggle to change mid-construction.

Thanks Bec... so from your experience do you suggest to lock interest rate at 3.88, or can I expect anything lower than this for owner occupier P&I loans in this year.

Hello Preeth

These are very interesting time in the Australian finance industry. The government through APRA is trying hard to make sure banks are kept on a leash, so that the banks could stay solvent. Even though the national cash rate has stayed stable at 1.5% this year, but looking at the interest rate movements by the banks recently. The interest rates have been moving upwards but mostly for the investment lending.

No one could predict these fluctuations ever. However but could be done is that you could decide on what you are looking to achieve now and in the coming 3 to 5 years. I would ask myself questions like:

- What is my present day's budget and the expected budget in the next 3 years?
- Am i good at following a budget?
- How is financial and personal situation going to change in the next 3 years?

Once you have analysed these topics, then the next thing to consider is Loan structuring. Let me know if you would like to discuss your options of different loan structures.

Warm Regards
Tejinder Virdi
0411790222
1800663737

Hi Preeeth,

As Bec alluded to, the prediction of what happens to rates is anybodies guess. Even the so called "experts" get it wrong a lot of the time.

In my opinion, fixing rates isn't about "beating the bank" as you will most likely lose, but more a necessary choice due to individual circumstances. Can you afford repayments if they by chance increase by say 1-2 percent in the future (if going variable), or do you need certainty in repayments for budgeting purposes because cashflow is tight and you will be living paycheck to paycheck? That's the prime reasoning behind choosing fixed rates.

The other point is (as Bec also made mention) is if you already started construction and have had your loan approved, to get it changed at this point in time might not be possible, and you might have to wait until construction is finished.

Cheers,

Tom

Thanks Tej, Tom and Bec...your inputs have created good awareness on fixing rate, with this I will be able to assess my situation and make wise decision on interest rates 😄