Buy Hold Sell: How bad will the fixed-rate mortgage cliff be?

Note: This episode was produced by Livewire Markets, it was filmed on Wednesday 28 June 2023 and published on Friday 7th July 2023. 

In this episode, Alphinity’s Andrew Martin and Tyndall’s Michael Maughan discuss the winners and losers of higher rates.

Much has been made of the pending mortgage cliff, and fair enough. The RBA cash rate has gone from the pandemic low of 0.1% to 4.10% in a little over a year, and the central bank estimates half of all fixed rate loans that enjoyed that 4% buffer will expire this year.

Whilst that sounds ominous, there are some things to remember. Only about one-third of Aussie adults have a mortgage (the rest being owners or renters) and at the peak in 2021, only about 35% of mortgages were fixed rate.

Whilst half of the 35% will expire and face a mortgage cliff this year, many Aussies who own outright or rent, won’t be affected at all.

So, are the banks really in that bad a position? And what about companies that actually benefit from higher interest rates, like the insurers?

As always, tarring any sector with the same brush is pointless and thankfully we have Andrew Martin from Alphinity Investment Management and Michael Maughan from Tyndall Asset Management to help sort the financial wheat from the chaff.