Fixed Rate Demand On The Rise

Posted on September 19th, 2012 · Posted in News

Fixed rate loans have dropped to their most competitive levels in many months, prompting an increased number of mortgage holders to lock in their loans.

Signing up to a fixed rate today could save you 40 to 60 basis points off your current variable interest rate. However some industry leaders are forecasting up to five or six rate cuts over the next year, so it might be wise to wait a few months to see what the Reserve Bank of Australia (RBA) actually decides to do. However with current fixed interest rates averaging in the 5.5% p.a. range they still represent excellent value compared with historical averages.

Something to consider: A fixed rate can offer payment stability and at present there are some very competitive offerings in the market, including some that are well below the bank’s standard variable rate.  However, what you gain in stability you generally lose in flexibility.  The toughest decision for most is whether to lock in an interest rate or not.  Choosing a fixed rate loan or a variable rate loan will depend on many varying factors such as your finances, the features you need in a loan, how long you plan to own the property for and whether you believe interest rates will rise or fall. In most cases, lenders will allow you to fix a portion of your loan so you can take advantage of the security of the fixed rate as well as the flexibility of a variable rate.