Mortgage Strategy Update

We’re finally seeing meaningful downward pressure on interest rates, which is welcome news for those refixing their mortgages. So, how do these recent changes impact our general mortgage strategy?

Shorter-Term Fixes Still Favoured: We continue to recommend shorter fixed terms of up to 2 years. Current rates reflect this strategy well, with 6-month rates at 6.89%, 1-year at 6.55%, 18-month at 6.15%, and 2-year at 5.99%. With the Reserve Bank forecasting their base rate to drop from 5.25% to 4.1% over the next year, we expect further rate reductions. The current rate differentials seem to fairly price in these anticipated cuts, so no particular short-term fixed period stands out as a clear frontrunner.

Holistic Approach to Refixing: If you have multiple fixed loans, it’s crucial to consider your mortgage refix dates holistically. Spreading out your refix dates can help manage risk and provide flexibility as the market evolves.

Our Top Pick: If we had to choose one fixed term duration, we’d lean towards the 1-year option. It’s short enough to avoid locking in for too long and should position you to refix at significantly lower rates in 12 months.

Timing Is Key: We advise holding off on refixing until as late as possible in your refix window to take advantage of potentially lower rates.

Personalized Advice: Remember, every situation is unique, so it’s essential to get personalized advice. We’re here to help you navigate these changes and tailor a mortgage strategy that works best for you.