Why fixing your mortgage on a longer term might not be the best idea

by | Dec 7, 2022 | Managing Your Mortgage

Please note that this content has been designed for informational purposes only and does not constitute individual financial advice.

If you have a mortgage and are looking down the barrel of refixing in the not-too-distant future, you may be wondering whether you fix for the short-term (1 or 2 years) or bite the bullet and fix for the long-term (3 years or more).

And it’s understandable why you might be thinking that fixing for longer isn’t a bad option. Currently, the difference between the short and longer-term interest rates is reasonably small (i.e. ANZ’s 1 yr. rate I 6.54% while their 3 yr. rate is at 6.59 – less than a percent of difference)* making it rather attractive in the face of potential further increases to mortgage rates.

While fixing for a longer term certainly comes with some pros (like knowing what your mortgage repayments will be for longer), it also comes with risks – namely the risk of missing out on savings opportunities that fixing for the shorter term might provide were interest rates to come back down.

How likely is that risk? That’s hard to predict, but the Reserve Bank has admitted that they’re engineering a recession that’s likely to start in mid-2023, and interest rates do tend to fall during a recession.

And if you’re thinking that if interest rates do fall, you’ll just break your mortgage and refix at the new lower rate, think again. Breaking a mortgage often comes with break fees – and these can be hefty if you’re looking to refix at a lower interest rate.

Hannah discusses this, and more, with Lloyd Burr on Lloyd Burr Live below.

If you are due to refix your mortgage soon and are wondering which option is best for you, talk to an enable.me financial adviser to get a better understanding of the pros and cons of each, and how they apply to your situation.


Disclaimer: This blog post is for informational purposes only and does not constitute individual financial advice. If you’re interested in receiving personalised financial advice, you can book in a consultation with an enable.me coach. Costs apply.

*Based on ANZ special rates at time of writing.


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