Interest Rates in 2022

Interest Rates in 2022

Many of our clients ask us ‘When are rates going to start rising again?’ or “When should we fix our loans?” We don’t have a crystal ball, but here are our thoughts on Interest Rates in 2022.

Fixed or Variable Rates for 2022

Variable rate customers are generally OK with riding the wave of the economic uncertainty over 2022. If the economy heats up, they will experience the pain of a variable rate increase. But if it cools down, they’ll enjoy a drop in the rates on their loans.

Fixed rate customers wish to have certainty over their level of repayments. The risk taken here is that if the economy significantly cools, rates head down and borrowers are stuck with higher interest rates in 2022. Unfortunately many of us with fixed rate loans are in this dilemma at the moment.

Where are Interest Rates Heading?

A lot of you will know that there is significant volatility in the financial system. It is difficult to say with certainty:

  • When will it all get better?
  • How low will rates go?
  • When will they start the long slow rise of a new cycle?

Anyone telling you the answers to these questions is guessing. Some guesses may be based on wider information sources, but they are still estimates.

The Issue with Perfect Timing

Picking interest rate movements is difficult

  • Rates could continue where they are
  • Rates could rise and then drop
  • Rates could remain relatively unchanged for a year or so

It is simply too hard to pick the time immediately before or after a long term fall or drop. It is also too hard to pick how long rates will stay at certain levels.

How Do I Decide if the Time is Right to Fit

We recommend that you try not to get caught up with perfect timing. It is simply too hard to achieve perfect timing when determining your interest rate, and it mainly requires a fair amount of luck. What you need to be comfortable with is:

  • Whether you want to fix at all
  • Whether you are comfortable with the fixed rate on offer at the time of your consideration

How can a Mortgage Broker Assist?

There are multiple ways a mortgage broker can assist. Firstly, they can provide information. They should continue to provide information about what they hear is happening in the industry. Secondly, they should answer your questions. If you have any questions relating to your particular situation, then give your mortgage broker a ring. Finally, they should assist with roll out changes. If you do decide to fix, they should take you through the relevant steps involved.

Vision Property and Finance has had over 20 years of award-winning experience in arranging the best interest rates for our clients and their mortgages. If you’re looking for a broker that outs you first, get in touch with us here.

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