- July 25, 2012
- Posted by: admin
- Category: Enconomy, Finance News, Financial goals, Home loan product, House prices, Interest rate, Wealth
Despite a spate of recent data indicating that the popularity of fixed rates is waning, now might be the right time for mortgage holders to fix their loan. Fixed rates are very low at the moment lower than they have been in years and as such, borrowers should think about fixing part or all of their home loan.
Historically speaking, when fixed rates fall below 6 per cent, they tend to be good value. Current rates are well below this and that gives some indication that the current fixed rates are about as low as they are going to go. In addition to that, some of the fixed rates on the market are 30 to 40 basis points below the average standard variable rates offered by Australia’s banks, which means even if the cash rate falls again forcing variable rates lower, there is still quite a buffer.
I think now is the time to fix part or all of the mortgage. Fixed rates are really competitive and customers need to take advantage of them. In the last week alone, 16 of Australia’s lenders cut their fixed rates by an average of 13 basis points. Many 3yr fixed rates are below 6%pa.
Sinking global interest rates triggered by continuing worries about the outlook for the world’s economy have lowered the costs Australian banks pay for fixed-rate loans. But while Australia’s lenders continue to cut the interest on their fixed rate products recent data shows the popularity of this type of loan is waning. Enquiries for fixed interest rate mortgages have flat-lined since the Reserve Bank of Australia lowered the official cash rate to 3.5 per cent.