When will Interest Rates drop?

 

Customers often ask me, these days more so than ever before – will the interest rates fall any time soon? I tell them your crystal ball is as good as mine. No one can predict the interest rate movement with any degree of certainty. It is currently believed in the market (keeps changing all the time as variables change) that the OCR might have near peaked, and the interest rates could potentially settle down towards the end of this year or early next. However, The ANZ Bank says it is premature to believe that the Reserve Bank has done with OCR hikes and interest rates won’t rise any further.

Whatever happens in the future, currently the borrowers whose fixed interest rates are coming up for renewal are finding steep increases in their mortgage repayments due to high-interest rates.

Many customers are advising, they are finding it hard to cope with increased mortgage repayments.

 

Read This- Rising Interest Rates – What should you do?

 

As an example, if a home loan of $500,000 with a current fixed rate at say, 2.50% is coming up for renewal. This will likely mean a jump in the interest rate by about 4%, which will likely mean a jump in repayments by about $250 weekly or more, on a 25-year loan term left. Many people are struggling.

A recent report indicated that Banks are preparing for rising bad debts and provisioning them in their books. Mortgage delinquencies rose to 1.32% of home loans in May, the highest level since March 2020, with 19,500 mortgage accounts reported past due, according to credit monitoring company Centrix.

If you are struggling, as I always say, seek help. Speak with your bank or a Mortgage Adviser. Doing nothing is not a strategy.