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The Olympic marathon of high interest rates and how you can go for gold

August 8, 2024 BY

Jamie Hyndman, director at Tribe Financial. Photo: SUPPLIED

If you have sat through enough Olympic games like I have, then articles in the lead up about cheating nations who have some form of state sponsored doping program, is like the seasons – bound to come around again.

But what if we could legally give our athletes an advantage? Would you do it? Would your neighbours? We do like to win, but would the cost be worth it?

Why don’t we treat our household wealth with the same drive to win? Maybe we do, but we don’t train for it. We don’t learn everything we need. And we certainly don’t do everything we can to win. We don’t do everything we can to beat the Jones family next door.

If we view our competitors as the annoying Jones family (apologies to any genuine Joneses out there), then the competition of getting ahead is “How do we pay as little in expenses as possible?”.

Our “competition pool” is the banks.

Banks make their margin on the difference between the interest rate for what they lend out money for, and what it costs them to get their hands on that money in the first place. Banks don’t hold all of the money they lend out as deposits. They themselves borrow money to lend on to their customers. And so it does cost them somewhere along the way. But make no mistake, they make a good profit in doing so.

So, I encourage you all to “legally dope” your family’s wealth and put you in the best place to win gold.

How do you do this? It remains simple.

The banks say the average home loan interest rate is 6.4 per cent on existing mortgages. This includes those still on ultra-low long term fixed rates (so it’s likely higher when comparing appropriately).

By doing nothing with the rate you’re currently on, you’re giving the Jones family a free hit (you better believe the Joneses are making sure they’re paying the lowest rate). It’s like arriving at the 100m freestyle final, but forgetting your togs, and racing in your clothes instead. You’re never going to win.

In the past four weeks, we have regularly refinanced clients to rates between 5.97 per cent to 6.15 per cent. Not every household is the same, therefore not everyone gets 5.97 per cent. But you should be getting under 6.15 per cent.

If your home loan is $500,000, and you shave 0.4 per cent off, then take this $2,000 saving and use it to continue to build your family wealth. There are any number of places this money can go to set your family up to win gold.

Considering something similar for your family and not sure what’s possible? Or have a question you’d like to ask our team? Email [email protected]

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