Yes I know, this chart tracks every interest rate decision stretching back to the nineties.
However, given most people are going to have a home loan for 25 or 30 years (more if you’re in Sydney!), having a rubberneck at the past doesn’t strike me as the dumbest idea I’ve ever had.
Now here’s what strikes me when I look at this historical chart:
First, current interest rates don’t look that high.
Second, not one person on earth correctly called each rate change in real time (and that includes the people setting them at the Reserve Bank!).
So, where does that leave us?
Well, whenever you see a headline predicting interest rates, don’t bother reading the article. There’s a very good chance they’ll be wrong. Instead, use it as a reminder to check your current home loan rate – then call your bank and whine like my kids.
Remember, there are only two ways to pay off your mortgage quicker: make extra repayments, and lower your interest rate.
Right now the best rates are a smidge under 6% for online lenders like Unloan, which is CommBank’s Jetstar brand. Use that as the basis of the negotiation. (Just remember, negotiating with lenders is like MAFS: Banking Edition: the hotter your financial package, the more lenders will fight to shack up with you.)
Yet what if right now you’re one of those people drinking watered-down red cordial and praying to the interest rate Jesus to deliver you salvation on your repayments?
If you’re barely holding on, here’s my advice:
Panic Early.
Make the hard decisions now. If you need help, see a financial counsellor (1800 007 007) or your bank’s hardship department. Whatever you do, create a realistic plan and begin working on it. Trust me, the Bluey doghouse looks a lot cuter on TV than it does in real life.
Tread Your Own Path!
