Home News Why it makes sense to fix your rates - pronto!

Why it makes sense to fix your rates - pronto!

Font size :
With speculation that interest rates could rise twice before the year is out, this could be the ideal time to lock in a fixed rate mortgage.
 
If you have a home loan, you’ve likely replayed the “fixed or variable?” debate over and over in your head as you try to figure out the best move for you.
 
Ask anyone who fixed their rates at the height of the GFC, when rates were tipped to reach double figures and punters locked in five-year loans at close to 9%, and they’ll tell you to stick with variable all the way.
 
But speak to another borrower who secured a 3-year rate of 4.99% when interest rates plunged in 2009, and they’ll have nothing but praise for fixed rate products!
 
It’s easy to see what the right decision was with the benefit of hindsight. But as a mortgage holder in the present, does it make sense to fix your interest rates today?
 
“I absolutely think there's a place for fixing rates, but not for the same reasons as most people think,” explains Medine Simmons, director of MF Simmons Mortgage Broking.
 
“It's a key part of risk management, not a way to 'beat the bank'. By that I mean, when you have a new mortgage and new repayments, a great way to manage the risk of interest rate increases is by fixing all or part of the loan.”
 
Simmons suggests that a great strategy is to fix half of your loan, so you can be sure of those repayments, while keeping the other half of your loan on a flexible variable rate. That way you’ll be cushioned against a huge repayment increase if rates go up, but you’ll still get some financial benefits if interest rate go down.
 
“The good thing is that right now, you won't be paying that much more than a discounted variable rate; it’s only about 0.5% more in some cases,” she says.
 
Keep in mind, though, that if you're only fixing your rate to beat the bank, you'll probably be disappointed, Simmons adds.
 
“They 'win' 80% of fixed loans, meaning rates usually go lower than your fixed rate most of the time. But if you're a bit nervous about your loan, fixing part of it is a great way to manage risk and start feeling comfortable about the repayments.”

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

Mortgage applications drop in second quarter Mortgage applications drop in second quarter

This marks the “beginning” of a downward trend, says Equifax executive Read more

To break monopoly, many smaller lenders could become banks To break monopoly, many smaller lenders could become banks The proposed change could break the Big Four’s monopoly over the mortgage market and help families get cheaper home loan rates ... Read more

Borrowing against the home: A strategy to pay for aged care Borrowing against the home: A strategy to pay for aged care Such debts can generally be divided into long-term and short-term loans ... Read more

NAB slashes growth forecasts for houses, units NAB slashes growth forecasts for houses, units Numerous factors, including tighter credit rules and the growing supply of new stock, have reined in Australia’s seemingly unstoppable housing market boom ... Read more

More mortgage news and articles

Sponsored Links

Saturday, Jul 22, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • 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