HomeAustraliaHelp! You fixed your home loan. Should I lock mine in too?

Help! You fixed your home loan. Should I lock mine in too?

Hi Nicole, Congratulations on your recent house purchase! I know what an amazing feeling it is to buy your first house on your own after a marriage breakdown. I’ve read your articles about how you fixed part of your new loan. You have previously mentioned that you thought interest rates would start coming down again in mid-2023. However, did you fix part of your loan because you no longer think that will happen? I would really appreciate your thoughts on this. Is it too late for me? Kristen

Thanks Kristen – it really is a wonderful feeling. I do need to preface this answer with the fact that the loan is my beautiful new baby – just six weeks old.

Many people were able to lock in their mortgages below 2 per cent. Borrowers don’t have that option now.Credit:Simon Letch

For other readers, I recently wrote that I deliberately structured my mortgage as two fairly equal split loans. I took both out on a heavily discounted variable rate, thanks to the full-scale mortgage price war that’s being waged right now.

This was to leave my options open if I decided I should fix at a later date. And just two weeks later, I did. Just the one loan. I will come back to that.

Many people were able to lock in their mortgages below 2 per cent during the pandemic. The time to fix was 2020, 2021, or the very beginning of 2022. Fixing is less wise when there are expectations of further rate rises.

But I didn’t have that option. And in finance, you can only deal with the prevailing circumstances.

Resenting the environment (‘Why am I so unlucky?’) or regretting your money moves (‘That was so silly of me!’) are always pointless exercises.

It was the rapidly rising inflation rate that spooked me. While it was forecast to top out at 7.75 per cent at the end of the year, it hit 7.3 per cent last month. Incidentally, the RBA has already revised its expected peak up to 8 per cent.

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