450,000 Australians still to come off fixed rates in 2024

With signs pointing to Australia being through the worst of the interest rate rises, in fact some commentators are suggesting rate cuts in 2024, it is important we don't forget that some 450,000 Australians are still to come off fixed rates in 2024.

?These mortgage holders will feel the impact of some 4% increase in their rates as they revert to variable, in addition if mortgage holders are unaware and they just roll to the revert rate they may find themselves an additional 50bp - 100bp out of market.

• A 4% increase on a $500,000 loan will be an additional $1,666 / month in interest
• A 4% increase on a $750,000 loan will be an additional $2,500 / month in interest
• A 4% increase on a $1,000,000 loan will be an additional $3,333 / month in interest

If you or your clients are going to be reverting from a fixed interest rate to a variable rate in 2024 the following options may be available to you along with factors to think about for your consideration.

Options - noting can all be done through your mortgage broker

• Re-fix your loan (fixed rates still tending to be above variable - however some are coming down)
• Let your loan revert to your current lender’s variable rate, and call the lender to negotiate a better rate
• Switch to a different loan with the same lender (for example with an offset account attached)
• Switch to a better loan with another lender. Noting if you choose to refinance your home loan, it's the same process as applying for a home loan.
• There are also considerations around offset and redraw, for example do you have an offset for your savings if coming off a fixed rate?

Refinancing

You may qualify for a lower interest rate by refinancing your home loan, especially if your financial situation has improved since you fixed your rate.

?Some considerations when refinancing are:?

• The value of your property and how much equity you may have built up. This might be particularly relevant if your loan to value ratio was above 80% when you initially applied
• Having stable employment:?Earning the same or more since you took out your home loan
• Other loan and credit facility limits
• Your credit score and repayment history
• The costs involved in refinancing versus the interest savings, by paying less interest.

Timing

It is recommended that you look at all of this 4 - 6 weeks prior to the fixed rate expiring. A refinance, the application, valuation and settlement process can sometimes take more than a month. In the meantime, you might revert to the lender's variable rates, which may mean paying a higher-than-necessary interest rate.

?If you do nothing, your home loan may automatically go onto a variable interest rate. You will have no say in what the variable rate is, and it may be higher than the interest rate you qualify for at other lenders.

For assistance and support contact Equilibria Finance: 1300 662 227 | [email protected]

Anthony Landahl | Managing Director Equilibria Finance

This is for general information purposes only and does not constitute advice. With all of these options there are a number of considerations outside the scope of what is covered in this article that you need to understand to ensure your personal circumstances are taken into consideration.

Equilibria Finance is a mortgage broking practice specialising in delivering residential and commercial mortgage and business and asset finance solutions to the clients of financial advice and accounting practices.