Recently I have been inundated by clients, family and friends all wanting to know if now is the time to fix interest rates on their home loans.. in short, NO is our answer.
Whilst many are rightfully concerned about the likelihood of impending rate rises, unfortunately Australia's banks have foreseen this concern and have already increased fixed rates significantly in the hope of cashing in on the public's concern.
At the time of writing this post, Basic Variable Home Loans could be accessed at approx 5.60% pa. Now compare this to 3 year Fixed Rates with Australia's big 4 banks which are all between 7.50% and 7.80% pa, and you will see that rates need to rise 2% just to reach the current level of these fixed rates.
Therefore in order to save money over a 3 year fixed term, rates would need to rise to approx 9.50% in just 36 months.. and whilst rate rises are likely an increase of 4% is extremely unlikely.
Rather than fix your home loan, we instead recommend that you increase your loan repayments now.
Take advantage of the low interest rates now by making extra repayments, instead of paying banks off for being greedy by fixing your loan.
Want to discuss this in greater detail?
Please call me at Mortgage Monitors on (03) 9827 9930.
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