As a mortgage adviser for nearly a decade, I often liken the housing market to a roller coaster. The past 10 years have certainly felt like one, with sharp climbs, sudden drops, and the thrill (or dread) that comes with every twist and turn.
Where are we now on this ride?
Interest rates have climbed steadily over the past few years, but as we approach late 2024, there are signs we’ve reached the peak. Market confidence is gradually shifting upwards, and borrowers are now faced with an important decision: how to navigate interest rates in a new environment.
Claire Williamson
Typically, rising interest rates cool the housing market by making borrowing more expensive, reducing demand. However, now that rates are now widely understood to have reached their high, the conversation is changing. Many clients are asking whether they should lock in a short-term rate with the hope that rates will drop further, or choose longer-term stability and the lure of a cheaper rate.
Currently, one key decision is between a six-month or 12-month fixed rate. Over the past six weeks, 12-month rates have fallen by about 0.6 per cent, following the Official Cash Rate (OCR) cut in August. The question is whether to opt for the slightly higher cost of a six-month rate now, in anticipation of further rate drops, or to play it safe with a slightly longer-term option.
When we’re advising clients, the answer always depends on their individual situation, lifestyle, and risk tolerance. Some clients are juggling career changes, property sales, or growing families, which all factor into their decision. For others, it’s about lifestyle choices like overseas travel or buying a new car. Risk appetite plays a huge role too. Some are comfortable paying more in the short term for the chance of securing a better deal in 2025, while others prefer the security of locking in their payments for the next year, even if rates drop.
There’s no one-size-fits-all solution. Each borrower’s situation is unique, and now more than ever, having the right advice is essential. Whether the priority is minimizing costs today or securing long-term stability, planning ahead is key to navigating the coming months.
We’ve experienced the highs and lows of the housing market roller coaster. Now, as we approach the next phase, the ride may start to feel a little more exciting — and with the right advice, a lot more manageable.
