What’s happening with mortgage rates in 2022?

Unless you’ve been sitting out the pandemic in a cave in Fiordland, you’re probably aware that interest rates are rising.

Anecdotally, we suspect a lot of home loans are maturing around now. That means a lot of borrowers will be looking for a new loan this year – and possibly worrying about the rate they’ll get.

Our advice is simple: Don’t panic.

Here are some things to keep in mind as we come out of the era of super-low interest:

If you kept the same repayments when rates dropped previously, you’ll reap the benefit now.

We often advise clients to keep making loan repayments at the higher rate when interest rates drop. It’s a simple hack that can lop years off your mortgage. You’ll also be used to living within your income and well placed to ride out a rise in interest rates.

Is that you? Give yourself a pat on the back!

If higher mortgage payments are straining your monthly budget, look at extending the loan term.

If you’re finding it a real stretch to balance your monthly budget, you can look at repaying your mortgage over a longer period.

Yes, it will take longer to clear the mortgage, and you’ll pay more overall. But you could get some precious breathing space right now.

Look to trim fat from your monthly budget.

The other common-sense move is to reduce your outgoings. One tip is to look at the savings you made under lockdown – and activate those savings again.

For instance, a lot of us saved money because we couldn’t go to the café every day. This inspired me to buy my own coffee maker, and now I’m saving $10 a day. Over a few months it has pretty much paid for itself. Over a few years my coffee savings will add up to a decent lump sum.

There are all sorts of things you can do to create savings and reduce your financial outgoings. You just need a plan – and we can help with that.