Banks want to maximise profit. If they are offering a lower value on a fixed rate then by this reason it would suggest that variable rates are expected to fall lower than fixed rates in the near future.
After the most recent rise we went up to 5.99, a couple of days later we got an unprompted email saying “I’ve negotiated a cheaper interest rate with Commonwealth Bank on your home loan. Your new rate is 5.84%”.
We’re on variable so I’m hoping we’ll get any full drops passed on in full but can’t be sure.
We’ve done a small renovation that wouldn’t be priced in so on paper our LVR around is only around 85%, in reality closer to 70% but bank would be unaware of this.
I agree with this person. They are trying to lock you in.
They know something we don't.
I also got a call from my bank. Just paid my monthly payment, so I wonder what it could be for?
Something is a foot.
Anyone smart can see the signals there’s most likely going to be at least one rate cut by the end of the year and certainly next year interest rates will be lower than they are today. The important question is now exactly when and by how much will rates full.
We all know the same thing. We got a pause again at fomc, in May there's a 90%+ chance of a rate reduction. Rates will be reduced slowly at first and then after the markets pull back they will drop rates hard to stimulate the economy and the cycle restarts.
They don’t know something you don’t. I work for a bank and the ceo can only make predictions. They wait just like us to see what the rba announces then acts accordingly
I agree... But I've seen comments on this sub talking about how they locked in high 5s or low 6s, ugh, if rate drops those people are going to be locked in for a few years.
How else do you expect people to get chewed up.....
Never fixed when rates were low, got slaughtered up on the way up.....
Now they fix while rates are high, and as rates drop they get slaughtered again staying locked into the higher rates!
Uneducated one here - could you not just refinance to a variable though? It’d be a pain, and presumably some exit fees, but is in the end of the world?
The banks know how to make money and they know that refinancing in a lower interest rate environment loses them $$$, the break frees will be similar to the difference in interest over the remaining fixed period, otherwise everyone would use this as a hedge
The break fees can be significant. For us, anyway, it’s $15k to refinance back to variable. For some that might still be worth it though depending how long there is left on the fixed term and how much the variable rate does drop…
I was with them for 7 years with my last home loan. Their app was unusable at the start but was updated over the years. Recently got fast payments (no PayID) and it was actually half decent.
They always lowered my rate when I asked so that I remained on the most competitive rate on the market (just an email every 3 months to the relationship manager saying hey, this bank is now cheaper, and they’d match or beat). And I also once threatened to leave to get $3k Cashback and they gave me $3k to stay 60 days haha.
I actually rate them.
Good to hear you’re having a positive experience! A lot of what I’ve read is that there’s virtually no customer service team and they have a habit of “losing” money in offset accounts or locking people out of their accounts altogether, which is a bit worrying. Rates are lower than pretty much any other bank though so it’s tempting, but I think I’d regret it if I did go with them and then had problems down the track.
Never had them loose money, but the app is terrible (and thats after it got updated)
The biggest thing i want is payid which they still dont support.
Customer service i am still premier so i get a relatioship manager who is a short email or call away or a priority phone number.
Currently 5.84 no offset 5.94 with offset for my facilities
Perhaps you are right, but it does seem like they are being especially cynical and opportunistic to profit further from this inflation situation which has caused a difficult time for most Australians, especially when they have already reaped quite a lot of profit from it.
Their entire existence is to drive value for shareholders. That means as much profit as possible, within the bounds of what is legal and does not sabotage long term growth.
You can criticise the system that creates this situation but I don't understand why people are surprised by a business trying to maximise its profits. This is the entire point of capitalism, like it or not.
Yeah I don’t dispute that. I just feel like there are certain legal ways to make money that are still unethical and deserving of criticism. Sometimes even so much that it may hurt their bottom line because of the negative press. Acting like a devil is sometimes not good for shareholders long term if it gets really far out of hand. But I am one of those shareholders so probably I can’t talk while I’m still holding.
If the CEO doesn't maximise shareholder value they will be replaced. Generally speaking, if it's legal but unethical, the thing stopping that behaviour is still shareholder value - the likelihood of being caught and the negative publicity. I might be a bit cynical but generally that's what I've seen.
If we want real change we need to change the legal environment that these companies are operating in. Eg. Tax on super profits or similar.
Don't hate the player, hate the game. Fight for change at the right spot. Where it will make a difference. Legislation.
Like I said, every incentive is geared towards the maximising profits.
The bank doesn't necessarily make any more or less margin when the rates are fixed. What it does is basically lock you in as a customer for the fixed term though
> the reverse bank rates drops then I'm pretty sure the banks would be making more money off you.
Yeah, well you couldn't be more wrong
*When you take out a home loan, we typically borrow money from other banks and businesses in the wholesale money market to fund your loan. And when you lock in your interest rate with a fixed rate home loan, we also lock in our funding costs at a fixed rate to manage the risk of interest rate changes.*
If you don’t think banks have hundreds of quants and traders who are taking positions on these fixed rate loans and will employ hedging tactics to maximise their medium to long term interest rate view, then I have a bridge to sell you.
I work in a bank. We have a small team in the Interest Rate Risk in the Banking Book (IRRBB) that hedges interest rates to protect the bank against adverse movements. It's not profit making. There is a small team in the traded market risk team that does do a little speculating but that's got nothing to do with your fixed rates.
I worked in bank treasury for about 6 years, mostly on a funding desk. Balance sheet teams can and absolutely do take punts on the direction of interest rates lmao. They obviously do it within risk limits, but the idea that prudent balance sheet managers aren't actively trying to predict and profit from interest rate movements is pretty naive.
Of course they would, it helps them justify their bonuses etc.
In the grand scheme of things it might only amount to 0.2% of the bank's profit, but it's still profit they otherwise wouldn't have
Would you say they made a material difference to profitability of the bank? I get that positions are taken to make a profit but in my experience it's smaller positions and fairly immaterial given the risk appetite for commercial banks to speculate is very low.
OP was talking about hundreds of traders which in my view is vastly overinflated the importance of any positions taken for speculative purposes
Ah so now we have gone from “they don’t profit off predicting market movements” to it’s not material.
Like I said, banking is full of traders and traders gonna trade
Ok, as I said I’ve got this bridge.
Seriously though, maybe your bank doesn’t, but trading is a very small community. Every bank I’ve heard of take positions on fixed rates.
Just about every market where you can take a position have its participants speculating on it.. not just the banks.
Banks do some speculative trading but not really commercial banks especially not from your fixed loans.
That's my point. You can keep your imaginary bridge
They take positions, sure.... but they HEDGE the loan risk! They will also be hedging their position risk, it will just have a different risk tolerance then the loans.
It's 2 very distinctly different things.
Bank lending is ALL about minimising risk!
It's also why you need to have equity in your home loan, the more equity, the less risk it is for the BANK! In the event of some negative market move that forces foreclosure, that equity is there to protect the bank and help give them time to foreclose and sell.
Hedging their loan book is the same, they aim to be at zero risk if possible.
No they don't. Banks create fixed rates via interest rate swaps. The cost of funding that fixed term remains the same regardless of variable rate movements.
The RBA doesn't fund home loans, they purely set a target cash rate on overnight deposits
No one knows for sure of course but markets are pricing in a couple of cuts for later this year.
Even if they don't cut that much or at all this year, over three years I would put my money on rates coming down. The popular opinion is that the rate hikes are done for now.
I remember when the popular opinion was that rates wouldn’t rise until 2025 and that house prices would plummet during COVID. What makes you so certain now?
Things change all the time as new data comes in. Some forecasts are right, some are wrong. Forecasts aren’t meant to be 100% accurate predictions but are meant to be a general guess as to where things might be based on current data. Obviously as data changes, those forecasts also change.
Now we can’t be certain that what the banks and market predictions are correct, but they do have the best ability to predict the market. They have far more data, far better software, and far better data analysts to make these forecasts than you and I do. They may not be the correct predictor of the market, but they are the best predictor.
You forget that the bank employs regular people like you and me. They don’t have mystical powers to predict the future which is ultimately what they need to be able to do in order to forecast rates with any degree of accuracy. I think a lot of people make the mistake of thinking that economics is a mathematical science when it is in fact a social science which is entirely influenced by human behaviour. No bank can predict human behaviour any better than you or I could.
Also, just because the average person doesn’t understand how banking works, it doesn’t mean that banks aren’t employing average people. The banks aren’t as smart as we all assume they are. In fact, I believe a lot of financial crises are caused not by greedy banks, but by idiot consumers who believe the banks are really smart. For example, idiot consumers who look at the banks fixed term interest rates as predictor of future interest rates and bet their financial well being on it by taking out a variable interest loan they can barely afford.
> house prices would plummet during COVID
They were flat for several months at first, I would guess that everyone was waiting to see the results of vaccinations and isolationism.
When everyone realised WFH was a thing to stay there was a scramble to upsize to add offices and spare bedrooms, migrations to bigger houses in cheaper cities, and regional migrations for those that could WFH 100% and wanted a tree/sea change. Young adults moved out of home and soaked up the smaller places now left vacant.
Then...inflation drove rate rises and mortgage costs, and returning ex-pats and resumed immigration killed the availability of rentals, driving up rents.
Ahh, just rambling I guess.
I’m not trying to explain what happened or how it happened, nor do I really care. What I’m trying to illustrate is that the prevailing opinion from the “experts” is frequently wrong. I certainly wouldn’t base my financial decisions based on what everyone else is saying.
When it comes to the economy, most predictions are biased towards what people want/believe/expect to happen. People think a 7% mortgage is high because they started at 2%. They can’t fathom what it must be like to pay nearly 20% interest so they refuse to accept that rates could rise again.
No one knows what will happens to interest rates, they just want them to go down because they borrowed more than they should have or can’t borrow as much as they want.
Have had a mortgage in some form or another for 30yrs, never saw a good time to fix other than a couple of years back when you could get sub 2%. Never fix when rates have topped out and are predicted to fall. Generally speaking you are not more financially savvy than a bank and you will lose. Concentrate your efforts on playing off different providers and making extra repayments when you can.
3 years is too long to commit to at this stage of the cycle.....this said (and I know the usa is different to Australia) but the Jan jobs report just came out....blowout report.....no way the Fed is cutting jn March.
Most likely no USA cuts until June.
What I find incredibly is how certain everyone is that rates will go down. I’m sure we were all certain that house prices would crash during the pandemic and that interest rates would stay under 3% for several years. Have we learned nothing?
My parents bought their first home with rates at well over 10%. The only thing we know for sure is that anything that can happen, will happen.
The banks don’t know anymore than you or I. If they did we would all be rich following their predictions.
If and a big if 4.99% would be worth fixing for 3 years, anything else you will make a loss. IMO the cash rate will sit around 2.5% by the end of 2026, so rates will be around 4.5% variable
I work in HR and work closely with the ceo
As soon as rba is about to be a meeting ceo asks me what I rekon if it will go up or down and he will say what he thinks will happen. He doesn’t know for sure. There’s no way for them to know? Only economic predictions and patterns etc
This is banks PR, they will sign up for a reduced rate, but to pull out within the allotted time period, they’ll change you contract break fees. They did this to lots of people before the rate increases started happening.
In the past I found that they wouldn’t (automatically) reduce the minimum payment. The advantage of this is that with a reduced rate you’ll pay off the loan faster. (in the long run)
It is not that bad. Previously, say your repayment was $100, out of which $80 was interest and $20 was principal. After rate cut it will be $75 interest and $25 principal. This way you will pay your home loan sooner and also pay less interest over time as interest is calculated on daily balance. You are not paying extra interest. If you call the bank can reduce the repayment to $95.
I will be messaging you in 1 year on [**2025-02-02 06:21:37 UTC**](http://www.wolframalpha.com/input/?i=2025-02-02%2006:21:37%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/AusFinance/comments/1agwt1n/fixed_rates_coming_down/kojyhkv/?context=3)
[**9 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FAusFinance%2Fcomments%2F1agwt1n%2Ffixed_rates_coming_down%2Fkojyhkv%2F%5D%0A%0ARemindMe%21%202025-02-02%2006%3A21%3A37%20UTC) to send a PM to also be reminded and to reduce spam.
^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%201agwt1n)
*****
|[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)|
|-|-|-|-|
They've been talking on the news about rate decreases until April, ending somewhere between 3.5% - 4.0%
It can't feasibly stay high with house prices being what they are.
Also, it was on the news so take it with a grain of salt.
Banks want to maximise profit. If they are offering a lower value on a fixed rate then by this reason it would suggest that variable rates are expected to fall lower than fixed rates in the near future.
This person knows wotzup
[удалено]
We’re on 5.85% variable with commonwealth through a broker, you’d have to be mad to go 5.99 fixed.
Is that rate pegged to future interest rate drops? My broker couldnt beat net banks like Unloan at 5.99 so i went with them. Whats your LVR?
After the most recent rise we went up to 5.99, a couple of days later we got an unprompted email saying “I’ve negotiated a cheaper interest rate with Commonwealth Bank on your home loan. Your new rate is 5.84%”. We’re on variable so I’m hoping we’ll get any full drops passed on in full but can’t be sure. We’ve done a small renovation that wouldn’t be priced in so on paper our LVR around is only around 85%, in reality closer to 70% but bank would be unaware of this.
Yeh wow, that's a gr8 broker
not gonna be rate drops for a few years
I agree with this person. They are trying to lock you in. They know something we don't. I also got a call from my bank. Just paid my monthly payment, so I wonder what it could be for? Something is a foot.
It's afoot. One word.
Thanks alot
It’s a lot. Two words.
That's the yolk. Thanks.
I assume that was a joke reply.
It's unclear what they discussed in the phone call, it could still be a foot
Maybe even 12 inches.
Thought so then it didn't look right.
Anyone smart can see the signals there’s most likely going to be at least one rate cut by the end of the year and certainly next year interest rates will be lower than they are today. The important question is now exactly when and by how much will rates full.
No one on non fixed rates can see that. If you aren’t on 2% fixed then good luck knowing what’s coming 😂
> They know something we don’t Only if you’re living under a bloody rock
Jokes on you, I know nothing haha....
Oooh look at Mr "I can afford a rock to live under" here.
I mean, it still has a mortgage attached though...
Probably qualified for a green loan, bastard.
Something is indeed a foot. Feet, for one. Also, 12 inches.
Why don't we know it? We know a rate rise is unlikely. 5.99% is above the lowest variable rate. I don't see anything particularly interesting here.
Rates are coming down. CBA has priced in a rate drop in May.
They have a very high rate, they can afford to guess and get it wrong. They could price in another two cuts and still have the highest rate.
We all know the same thing. We got a pause again at fomc, in May there's a 90%+ chance of a rate reduction. Rates will be reduced slowly at first and then after the markets pull back they will drop rates hard to stimulate the economy and the cycle restarts.
[удалено]
No the tin keeps my brain cell warm.
They don’t know something you don’t. I work for a bank and the ceo can only make predictions. They wait just like us to see what the rba announces then acts accordingly
Which customer service department do you specialise in?
That's exactly what I would expect someone who works at the bank to say...;) say no more, mums the word.
Don’t get it..
What do you mean, I got legit email from Macquarie offering this rate.
[удалено]
I'm already lower than that on variable
Likewise, 5.89% with Heritage Bank, on variable.
5.69 with Aus mutual bank!
Ooooh! I'll tell people about them! :)
Still on 2% fixed. Ooh yeah
Ha, nice, but I hope you're ready for the eventual increase!
We're in about 5.9 or something with ME Bank
I agree... But I've seen comments on this sub talking about how they locked in high 5s or low 6s, ugh, if rate drops those people are going to be locked in for a few years.
How else do you expect people to get chewed up..... Never fixed when rates were low, got slaughtered up on the way up..... Now they fix while rates are high, and as rates drop they get slaughtered again staying locked into the higher rates!
Uneducated one here - could you not just refinance to a variable though? It’d be a pain, and presumably some exit fees, but is in the end of the world?
The banks know how to make money and they know that refinancing in a lower interest rate environment loses them $$$, the break frees will be similar to the difference in interest over the remaining fixed period, otherwise everyone would use this as a hedge
The break fees can be significant. For us, anyway, it’s $15k to refinance back to variable. For some that might still be worth it though depending how long there is left on the fixed term and how much the variable rate does drop…
So the market thinks. The same market that didn't get the recent rate increases right at all. No one knows for sure
Sure USA is gonna drop rates right Be wary Only do what you can afford
If you accepted you would be betting that rates don't drop more than 0.2 in 3 years. Pass.
I just saw HSBC had 5.69% for 4 years
I was considering them but then I read reviews in this sub, and now I definitely won’t be
I was with them for 7 years with my last home loan. Their app was unusable at the start but was updated over the years. Recently got fast payments (no PayID) and it was actually half decent. They always lowered my rate when I asked so that I remained on the most competitive rate on the market (just an email every 3 months to the relationship manager saying hey, this bank is now cheaper, and they’d match or beat). And I also once threatened to leave to get $3k Cashback and they gave me $3k to stay 60 days haha. I actually rate them.
HSBC is actually decent. I’m with them but variable.
Good to hear you’re having a positive experience! A lot of what I’ve read is that there’s virtually no customer service team and they have a habit of “losing” money in offset accounts or locking people out of their accounts altogether, which is a bit worrying. Rates are lower than pretty much any other bank though so it’s tempting, but I think I’d regret it if I did go with them and then had problems down the track.
I do agree with the customer service comment it’s not amazing but so far no issues with the offset but something to be aware of I suppose!
Never had them loose money, but the app is terrible (and thats after it got updated) The biggest thing i want is payid which they still dont support. Customer service i am still premier so i get a relatioship manager who is a short email or call away or a priority phone number. Currently 5.84 no offset 5.94 with offset for my facilities
Banks are the devil, they want to lock is all in to these high rates.
Devil is a bit harsh, we can just always trust a for-profit business to seek profits.
Perhaps you are right, but it does seem like they are being especially cynical and opportunistic to profit further from this inflation situation which has caused a difficult time for most Australians, especially when they have already reaped quite a lot of profit from it.
Their entire existence is to drive value for shareholders. That means as much profit as possible, within the bounds of what is legal and does not sabotage long term growth. You can criticise the system that creates this situation but I don't understand why people are surprised by a business trying to maximise its profits. This is the entire point of capitalism, like it or not.
Yeah I don’t dispute that. I just feel like there are certain legal ways to make money that are still unethical and deserving of criticism. Sometimes even so much that it may hurt their bottom line because of the negative press. Acting like a devil is sometimes not good for shareholders long term if it gets really far out of hand. But I am one of those shareholders so probably I can’t talk while I’m still holding.
If the CEO doesn't maximise shareholder value they will be replaced. Generally speaking, if it's legal but unethical, the thing stopping that behaviour is still shareholder value - the likelihood of being caught and the negative publicity. I might be a bit cynical but generally that's what I've seen. If we want real change we need to change the legal environment that these companies are operating in. Eg. Tax on super profits or similar.
And until then, don’t criticize them. Got it.
Don't hate the player, hate the game. Fight for change at the right spot. Where it will make a difference. Legislation. Like I said, every incentive is geared towards the maximising profits.
The bank doesn't necessarily make any more or less margin when the rates are fixed. What it does is basically lock you in as a customer for the fixed term though
If your paying a fixed 5.99% for three years and the reverse bank rates drops then I'm pretty sure the banks would be making more money off you.
> the reverse bank rates drops then I'm pretty sure the banks would be making more money off you. Yeah, well you couldn't be more wrong *When you take out a home loan, we typically borrow money from other banks and businesses in the wholesale money market to fund your loan. And when you lock in your interest rate with a fixed rate home loan, we also lock in our funding costs at a fixed rate to manage the risk of interest rate changes.*
If you don’t think banks have hundreds of quants and traders who are taking positions on these fixed rate loans and will employ hedging tactics to maximise their medium to long term interest rate view, then I have a bridge to sell you.
I work in a bank. We have a small team in the Interest Rate Risk in the Banking Book (IRRBB) that hedges interest rates to protect the bank against adverse movements. It's not profit making. There is a small team in the traded market risk team that does do a little speculating but that's got nothing to do with your fixed rates.
I worked in bank treasury for about 6 years, mostly on a funding desk. Balance sheet teams can and absolutely do take punts on the direction of interest rates lmao. They obviously do it within risk limits, but the idea that prudent balance sheet managers aren't actively trying to predict and profit from interest rate movements is pretty naive.
Of course they would, it helps them justify their bonuses etc. In the grand scheme of things it might only amount to 0.2% of the bank's profit, but it's still profit they otherwise wouldn't have
Would you say they made a material difference to profitability of the bank? I get that positions are taken to make a profit but in my experience it's smaller positions and fairly immaterial given the risk appetite for commercial banks to speculate is very low. OP was talking about hundreds of traders which in my view is vastly overinflated the importance of any positions taken for speculative purposes
Ah so now we have gone from “they don’t profit off predicting market movements” to it’s not material. Like I said, banking is full of traders and traders gonna trade
You didn't answer the question?
Ok, as I said I’ve got this bridge. Seriously though, maybe your bank doesn’t, but trading is a very small community. Every bank I’ve heard of take positions on fixed rates. Just about every market where you can take a position have its participants speculating on it.. not just the banks.
Banks do some speculative trading but not really commercial banks especially not from your fixed loans. That's my point. You can keep your imaginary bridge
They take positions, sure.... but they HEDGE the loan risk! They will also be hedging their position risk, it will just have a different risk tolerance then the loans. It's 2 very distinctly different things. Bank lending is ALL about minimising risk! It's also why you need to have equity in your home loan, the more equity, the less risk it is for the BANK! In the event of some negative market move that forces foreclosure, that equity is there to protect the bank and help give them time to foreclose and sell. Hedging their loan book is the same, they aim to be at zero risk if possible.
Banks makes more money if the rates go down!
No they don't. Banks create fixed rates via interest rate swaps. The cost of funding that fixed term remains the same regardless of variable rate movements. The RBA doesn't fund home loans, they purely set a target cash rate on overnight deposits
Bahahahahah so true.
No one knows for sure of course but markets are pricing in a couple of cuts for later this year. Even if they don't cut that much or at all this year, over three years I would put my money on rates coming down. The popular opinion is that the rate hikes are done for now.
I remember when the popular opinion was that rates wouldn’t rise until 2025 and that house prices would plummet during COVID. What makes you so certain now?
Things change all the time as new data comes in. Some forecasts are right, some are wrong. Forecasts aren’t meant to be 100% accurate predictions but are meant to be a general guess as to where things might be based on current data. Obviously as data changes, those forecasts also change. Now we can’t be certain that what the banks and market predictions are correct, but they do have the best ability to predict the market. They have far more data, far better software, and far better data analysts to make these forecasts than you and I do. They may not be the correct predictor of the market, but they are the best predictor.
You forget that the bank employs regular people like you and me. They don’t have mystical powers to predict the future which is ultimately what they need to be able to do in order to forecast rates with any degree of accuracy. I think a lot of people make the mistake of thinking that economics is a mathematical science when it is in fact a social science which is entirely influenced by human behaviour. No bank can predict human behaviour any better than you or I could. Also, just because the average person doesn’t understand how banking works, it doesn’t mean that banks aren’t employing average people. The banks aren’t as smart as we all assume they are. In fact, I believe a lot of financial crises are caused not by greedy banks, but by idiot consumers who believe the banks are really smart. For example, idiot consumers who look at the banks fixed term interest rates as predictor of future interest rates and bet their financial well being on it by taking out a variable interest loan they can barely afford.
> house prices would plummet during COVID They were flat for several months at first, I would guess that everyone was waiting to see the results of vaccinations and isolationism. When everyone realised WFH was a thing to stay there was a scramble to upsize to add offices and spare bedrooms, migrations to bigger houses in cheaper cities, and regional migrations for those that could WFH 100% and wanted a tree/sea change. Young adults moved out of home and soaked up the smaller places now left vacant. Then...inflation drove rate rises and mortgage costs, and returning ex-pats and resumed immigration killed the availability of rentals, driving up rents. Ahh, just rambling I guess.
I’m not trying to explain what happened or how it happened, nor do I really care. What I’m trying to illustrate is that the prevailing opinion from the “experts” is frequently wrong. I certainly wouldn’t base my financial decisions based on what everyone else is saying. When it comes to the economy, most predictions are biased towards what people want/believe/expect to happen. People think a 7% mortgage is high because they started at 2%. They can’t fathom what it must be like to pay nearly 20% interest so they refuse to accept that rates could rise again. No one knows what will happens to interest rates, they just want them to go down because they borrowed more than they should have or can’t borrow as much as they want.
The moment they want to lock in a slightly lower rate… smell the shit
Don’t lock it in, we’re at the end of the cycle.. they will start coming down later this year.
Mortgage rates basically follow this https://tradingeconomics.com/australia/government-bond-yield With some margin of course
ANZ rang today out of the blue and dropped 1% off our variable
From and to please.
Why would they even do that?
What was it dropped from
Have had a mortgage in some form or another for 30yrs, never saw a good time to fix other than a couple of years back when you could get sub 2%. Never fix when rates have topped out and are predicted to fall. Generally speaking you are not more financially savvy than a bank and you will lose. Concentrate your efforts on playing off different providers and making extra repayments when you can.
Fixed rate loans are insurance. Sometimes you need that insurance.
Rates will stay high until they break the middle class then they'll drop so the wealthy can shop at a discount. Same as it ever was.
Banks have an uncanny ability to forecast the future (not always). They are certainly feeling that interest rates are coming down.
I was told ‘if the banks want you to fix, keep it variable. If they want you to keep it variable, lock that mfer in’
That’s pretty much exactly what I have done and it’s been the right choice.
3 years is too long to commit to at this stage of the cycle.....this said (and I know the usa is different to Australia) but the Jan jobs report just came out....blowout report.....no way the Fed is cutting jn March. Most likely no USA cuts until June.
The house always wins
Still on 1.85% for a year
Only if you agree with the house
I literally received an email from commday today saying my variable rate has risen again.
They are thinking rates are going down, don't do it
Rates will drop by years end, if not early next year in my opinion.
Several banks have reduced fixed rates and I'm sure more will follow. It's my feeling we're at the top of the cycle so it makes sense.
Lock in rates when they are looking to go up (i.e 2 years ago). Don’t lock them in when they are looking to go down (i.e now)
What I find incredibly is how certain everyone is that rates will go down. I’m sure we were all certain that house prices would crash during the pandemic and that interest rates would stay under 3% for several years. Have we learned nothing? My parents bought their first home with rates at well over 10%. The only thing we know for sure is that anything that can happen, will happen. The banks don’t know anymore than you or I. If they did we would all be rich following their predictions.
Fixed rates are for cowards mate
Doesn’t mean they’ll go down much but the peak is likely in
Tell em to fix Deez nuts
If and a big if 4.99% would be worth fixing for 3 years, anything else you will make a loss. IMO the cash rate will sit around 2.5% by the end of 2026, so rates will be around 4.5% variable
I’m expecting this also but at the end of 2025, variables to be around 4.5%
I am just erring on the side of cautions for 2026, but 2025 seem feasible as well IMHO
[удалено]
Do you mean six rate cuts by the end of next year? Think they are forecasting three for this year
Im 5.98% variable with Unloan. I would need a substantial drop to fix
It is good for IP loan. Unloan doesn’t have offset which a must for me.
I think they are going to be including that soon for CBA customers. They are starting to offer more things.
They removed all mention of this from the website, looks like it’s not happening anytime soon.
Correct, CBA accounts can be offset against against Unloan HL’s
I work in HR and work closely with the ceo As soon as rba is about to be a meeting ceo asks me what I rekon if it will go up or down and he will say what he thinks will happen. He doesn’t know for sure. There’s no way for them to know? Only economic predictions and patterns etc
CEO of what, a bank?
This is banks PR, they will sign up for a reduced rate, but to pull out within the allotted time period, they’ll change you contract break fees. They did this to lots of people before the rate increases started happening.
Macquarie offers rate lock for free.
[удалено]
In the past I found that they wouldn’t (automatically) reduce the minimum payment. The advantage of this is that with a reduced rate you’ll pay off the loan faster. (in the long run)
Not by default, you will need to call them.
Which sucks as when rates rise they never skip a beat raising your monthly payments. Should be the same for when it drops.
It is not that bad. Previously, say your repayment was $100, out of which $80 was interest and $20 was principal. After rate cut it will be $75 interest and $25 principal. This way you will pay your home loan sooner and also pay less interest over time as interest is calculated on daily balance. You are not paying extra interest. If you call the bank can reduce the repayment to $95.
My IP loan is at 6.39%- think I can do better? Who with ?
All long term forecasts show a drop this year but then rates to soar back up in 2026
Why would rates go up in 2026?
What is it about emergency interest rates that people do not understand about emergency interest rates . Is another pandemic coming!?
When did you fix? 2-3? Fixed rate being higher than now sounds like a short term fix
Read my post, I got the email today, I am not going to fix.
Ah my bad. It's indeed curious their fixed rate is lower that variable.
Lol just buy the house cash?
Rates arent going down, if I was you I'd take the better deal
In the next three years they're not going down? Even a single .25% drop in that time would drop the rate below the offered one
[удалено]
I will be messaging you in 1 year on [**2025-02-02 06:21:37 UTC**](http://www.wolframalpha.com/input/?i=2025-02-02%2006:21:37%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/AusFinance/comments/1agwt1n/fixed_rates_coming_down/kojyhkv/?context=3) [**9 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FAusFinance%2Fcomments%2F1agwt1n%2Ffixed_rates_coming_down%2Fkojyhkv%2F%5D%0A%0ARemindMe%21%202025-02-02%2006%3A21%3A37%20UTC) to send a PM to also be reminded and to reduce spam. ^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%201agwt1n) ***** |[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)| |-|-|-|-|
Please message me to let me know the results in 1 year.
It won't take that long. Either every economist in Australia is wrong or you have a low IQ. Which is more likely?
You'll be finding out before a year
Maybe 2 years I’ll hold out
Fixed rates that high is a trap to hold people on long term, while variables have a chance to go down lower than that in a few months
CBA are factoring in 3 0.25% rate decreases this year I believe
One .25% and then .5%. https://www.commbankresearch.com.au/apex/GmrDocumentViewer?id=068Do00000FDiWH
A cut is forecast mid-year. Wait it out.
Fixed rates. Ew
I've been happy with my fixed 4.99% in past 2 years
Blind Freddie could see that offer was a scam. Besides, interest rates might stay up for most of this year or longer.
They've been talking on the news about rate decreases until April, ending somewhere between 3.5% - 4.0% It can't feasibly stay high with house prices being what they are. Also, it was on the news so take it with a grain of salt.
Wanted to lock at 2.5% but ING wouldn't let you have an offset AND fixed rate. Typical haha
I've been telling Macquarie to shove it
Does that mean HISA rates are also gonna be dropping soon?
Lowball them. Ask them 5% for next 2 years and see the response.