After a bumper week last week in terms of housing market and interest rate news, there hasn’t been too much of note to report in the last few days.
After all the fanfare leading up to it — and the bombshell that was the removal of the First Home Grant — Budget 2024 proved to be pretty uneventful
The delivery of promised tax cuts will be welcome news to many.
But the actual dollar amount it’s putting back in people’s pockets won’t be enough to make a tangible difference in the current cost-of-living crisis, or to meet the higher mortgage costs many households are facing right now.
As an example, a couple earning $150,000 per year between them will get about $40 extra in the bank each week, which works out to about $2,000 a year. So, it’s not a lot, but at least it’s something.
With the latest mortgage arrears statistics having climbed another 7% — meaning $1.9 billion worth of loans are now behind on repayments — every little bit counts.
Out in the world of interest rates, there hasn’t been a lot of movement either
After some fluctuation in wholesale interest rates following the most recent OCR announcement, things have stabilised again over the last week.
The best deal out there right now in terms of one-year fixed rates is still that same 6.85% — which, now we’ve made it through those post-OCR wobbles, is unlikely to change any time soon.
Borrowers may find themselves tempted by some of the longer-term rates that are available at the moment — with some two- and three-year fixed rates ranging from 6.5%-6.7%.
The recommendation to anyone thinking about fixing longer term is to keep in mind the fact that interest rates are expected to start coming down in the next 12 months. It could be towards the end of this year, or it might be early next, but the sense is definitely that it won’t be as far out as the Reserve Bank is currently predicting (which is late 2025).
Anyone looking to fix, or refix, in the current environment would be well advised to stick to a one-year term. That should get you comfortably through to such a time when interest rates have started to fall, which means your next refix rolls around, you’ll be able to reap the benefit of that.
Check in again next week for our latest update on what’s happening with interest rates.
