- October 5, 2010
- Posted by: admin
- Category: Interest rate
It appears fixed rate home loans now account for 3.7 per cent of all loans written – the highest level since September 2009.
New borrowers are becoming more cautious about their interest rate and future repayments. I have seen over the last couple of months a growing demand for this loan type and I’d say this will continue as we head into an environment of rising variable rates. I do find it interesting that it’s taken so long for this trend to get a roll on. Given all the talk about expected cash rate increases over the next year or so. Of course, fixed term loans are more restrictive and can incur significant break fees so that could be a deterrent.
To select a fixed rate rate home loan borrowers are sacrificing greater flexibility for the peace of mind that can come with guaranteed steady home loan payments.
I am still a great believer in spreading the risk and maybe part fixed and part variable might be a better option if you have surplus income to allow you to pay off as much as you can in the shortest time frame.