Aussies have fallen in love with fixed interest rates during COVID, thanks to ultra-cheap deals. My refinance couldn’t have happened a moment too soon, writes Jess_Irvine | OPINION
to secure a home loan with a “1” per cent interest rate, I’m happy to share that I’ve finally been approved to refinance to a new lender at a fixed rate of 1.84 per cent for two years, plus $4000 cash back. I’ve kept only a small portion of my loan on a variable interest rate, so I can stash my emergency funds in an offset account against it.
We’re just in the business of politely breaking up with my existing lender, who has been unable to match my new rate. Settlement is scheduled in a week or two.The tide is turning on the fixed interest rate market for home loans and it’s time to get moving if you, too, want a “1” in front. But there is also no need to completely panic – interest rates, in general, are going to stay low for a while yet, for reasons I’ll get to.
“In combination, these measures have caused interest rates across the economy to be lower than they would have been otherwise,” says Kent.But that, according to Kent, owes more to a global re-evaluation on financial markets of inflation prospects, not the end of the TFF. And anyway, “fixed-rate loans at these longer terms account for a small share of overall lending”.during COVID, thanks to ultra-cheap deals.
“In short,” concludes Kent, “there’s been a bit of an increase in some new fixed rates, but the effect of this on broader financial conditions is minimal”. Moreover, “shorter-term rates, including for variable-rate loans which constitute the bulk of credit, will remain low for as long as it takes to achieve the bank’s inflation goals.”
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