Where are interest rates heading?

Font size :

Interest rates are very hard to predict. Very few people can consistently forecast interest rates correctly. Borrowers trying to predict future home loan interest rates should consider that professionals who get paid large amounts of money quite often get it wrong.

Home loan interest rates are based on interest rates in the wholesale money and fixed interest securities markets. Current interest rates in these markets are based on participants’ expectations about future interest rates. Suggesting you can predict where interest rates are heading is like saying you either have more information about interest rates than the market traders or that you are better at analysing the information than they are.

Regardless of how difficult it is to predict interest rates, borrowers need to choose which type of home loan they want.

Variable home loan interest rates are still lower than fixed home loan rates. Variable rates would have to rise quite significantly and in a reasonably short period of time for a borrower to be better off with a fixed interest rate. This does not appear to be likely to happen, but how many borrowers with variable rates in the late 1980s would have expected their home loan interest rate to rise above 17%?

One point to keep in mind is that fixed rates are generally less flexible and the borrower may be penalised if they make extra repayments or try to pay out the loan in full during the fixed period.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Wednesday, Sep 20, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords