Rate rises and your mortgage

[MoNkEy]

7.24%?

Is that right?

Yep.

It will no doubt rise to 7.49% in the next few days.

 

[The DoggFather]

Can’t be! Must be 5.24%

After all the bullshit rises mine is 4.74%

 

[The DoggFather]

Yep.

It will no doubt rise to 7.49% in the next few days.
View attachment 65015

Bro.... call ME Bank TOMORROW!

Mine is 4.74%

 

[MoNkEy]

Bro.... call ME Bank TOMORROW!

Mine is 4.74%

I'm not paying any interest mate, my mortgage is fully offset.

 

[The DoggFather]

I'm not paying any interest mate, my mortgage is fully offset.

How's that work? Genuinely have no idea.

EDIT: just read up on it. Pretty good system

 

[coach]

Yuck mine still fixed at 2.19%
But that term ends December , not looking forward to paying more for nothing

 

[MoNkEy]

How's that work? Genuinely have no idea.

So I have my savings account linked to my mortgage.

The balance of the savings account (the "offset" account) is deducted from the mortgage and you only pay interest on the residual balance of the mortgage.

The balance in my savings account is currently larger than the mortgage balance, therefore I pay no interest.

Not all mortgages allow offset.

 

[Natboy]

How's that work? Genuinely have no idea.

EDIT: just read up on it. Pretty good system

Definitely do it mate and put all your salary, money for bills, holiday money etc into it if you can. To be fully offset is great & so is a 2.19% rate

 

[The DoggFather]

So I have my savings account linked to my mortgage.

The balance of the savings account (the "offset" account) is deducted from the mortgage and you only pay interest on the residual balance of the mortgage.

The balance in my savings account is currently larger than the mortgage balance, therefore I pay no interest.

Not all mortgages allow offset.

That's awesome brother!

I'm blessed to have a really small mortgage, just feel for the people with "average" or large loans

 

[The DoggFather]

Definitely do it mate and put all your salary, money for bills, holiday money etc into it if you can. To be fully offset is great & so is a 2.19% rate

That's awesome, will definately check it out.

 

[ThePedigree]

Cheers mate. I’ve got a 2% fixed rate coming off soon & will see what I can get. Apparently rates will start dropping by November but who knows and we may see another couple of rate rises before that. What are your thoughts?

I tell everyone if you’re on a fixed rate don’t pay the minimum if you can, pay the extra to get ahead.

Yes hearing the same about rates dropping at the end of the year. But was also hearing in 2021 that rates wouldn’t rise until 2024. And we know how that went.

Let me know if you need any help when you get close to that fixed term expiring. [emoji4]

 

[ThePedigree]

But it’s not just paying them off.
Applying for credit cards (0% balance transfer, bonus FF points etc) affects your credit score, so if you’ve applied for a lot of cards in recent years (regardless of successful application or not and whether you paid them off in full every month or not) it’s considered ‘applying for a loan’ which can work against you in applying for larger loans such as refinancing a mortgage. Just one thing to be wary of, regardless of how well you’ve managed the card accounts.

Exactly right. Know of an applicant at a major bank that was declined for further lending due to having done close to 26 balance transfers in 3 yrs. Banks wouldn’t touch him even though he had no defaults and no late payment history.

 

[ThePedigree]

Yes, of course it was hard back in the late 80's and early 90's when the interest rates were very high. Life was a lot simpler back then too which helped. Households had one car per family and two cars were a luxury, now having two cars per family is the absolute minimum, some have 3 or 4 cars. You didn't have to fork out money for expensive IT products like laptops, there was no mobile phone bills or internet bills, there was no foxtel or pay TV bills to pay and many other new age subscriptions(they add up). People home cooked a lot more, and drank instant coffees at home. Going out for a bite or restaurant was a big deal, now it's very very normal if done everyday.

Yep my Dad left in 84, wanted to sell the house so he could buy something too. Mum went to court to keep it and by 89/90 the lender she refinanced with was at 21% (non bank). She lost the house. Sad days for some.

 

[ThePedigree]

Caught up with a mate this morning who’s in real estate. He mentioned that a property in his area was just re-possessed (foreclosed) by the lender and the repo guy told my mate (they know each other) ‘the lender has advised us we’re going to have no shortage of work this year’ - the story goes that there’s a fair amount of stock in the ‘double whammy’ basket where people bought at the peak between late 2020 to late 2021. They’re now in a position where they can’t service the loan due to rate rises but the property value has fallen to a point where they have negative equity so they walked away for the bank to sell it. Ugly - and probably what no-one wants to say out loud. The RBA saying during Covid that ‘interest rates would unlikely rise until 2024’ was pretty irresponsible in hindsight - it likely fuelled what ultimately might burst the bubble. Interesting to see where things at at by mid-year.

Interested to see the data by the end of the year on many repos actually happen.

 

[Natboy]

I tell everyone if you’re on a fixed rate don’t pay the minimum if you can, pay the extra to get ahead.

Yes hearing the same about rates dropping at the end of the year. But was also hearing in 2021 that rates wouldn’t rise until 2024. And we know how that went.

Let me know if you need any help when you get close to that fixed term expiring. [emoji4]

Agreed. If you’re fixed pay the max you can without penalty. I’ve got a broker but thanks a lot anyway mate. There are a few people here who should definitely contact you

 

[DinkumDog]

That's awesome, will definately check it out.

Some lenders offer multiple offset accounts too, so if you want to divide money up say for Bills, Kids, Holiday etc you can have targets and all of it works to offset interest on your mortgage. Not for everyone but cool if you like the granular approach to your dough.

 

[dogwhisperer]

There are a lot of banks still out there that offer interest rates 2% below the big four banks, and they are good stable banks that have been around for a long time. There's also a digital home loan facility built by the Commonwealth bank called Unloan designed for re-financing offering lower rates as well. For those that are good savers, I suggest putting away as much as you can before the fixed rate expires and opening up a 100% offset account against your loan to reduced how much you pay in interest each month.

Try to throw everything, even the kitchen sink into the offset account. If there's a car you don't need sell it and throw the money into the offset and use public transport for the time being. Anything that you can sell and you don't really need then sell it and pump the offset account as much as you can.
Cut out all unnecessary expenses that you don't need to pay. Cook at home, don't eat out, and don't buy any new clothes or electronic gadgets. If you smoke, stop smoking, if you drink alcohol then turn to water. You'll be surprised how much you will save.

Remember, it's only for maybe a year or so until rates make their way back down, then you can buy all those things you sold.

As the great Peter "Bullfrog" Moore said, tough times don't last but tough people do. Or was that Punchy Nelson who said that? Lol!

 

[BELMORE]

Exactly right. Know of an applicant at a major bank that was declined for further lending due to having done close to 26 balance transfers in 3 yrs. Banks wouldn’t touch him even though he had no defaults and no late payment history.

I feel like you should be able to get around that with a broker? For example if I have a 500k salary, willing to put a 20% deposit down on a 1 million dollar dwelling, would a bank really say no to that based on credit history?

 

[NPC83]

Agree mate. The example I sighted was likely an outlier exacerbated by inflation but likely there’s some pain ahead for those without sufficient buffer. Imagine walking away because you don’t have a choice - ouch.

I definitely feel for those in that situation mate and they were irresponsible comments from Governor Phillip Low re rates not moving until 2024. Forced sales are never fun especially if there are young families involved. Fortunately we live in a country where there are plenty of options.

 

[HD and Ink]

I'm not paying any interest mate, my mortgage is fully offset.

Wouldn't it be beaut if they did that with credit cards......just saying.