Fixed Rate Loan Popularity Wanes - Should I Ride the Rollercoaster?

Opting for a fixed interest rate home loan over its variable cousin is really a scenario that plays the old tension between paying a bit more money to possess peace of mind, and paying rather less now however with the risk of taking a loss later. Actually, when you start considering how fixed interest rate home loans function inside your day to day life, you will see several similarities to insurance plans! Recently the development in fixed interest rate loans has levelled off - it would appear that home loan company is becoming more confident within the state of official rates of interest, and feel less necessity of the security of the fixed rate. Will this function as the right decision for you personally? We explore what are you doing in the world of fixed and variable rate loans, and whether you need to join the growing number of individuals choosing to ride the variable rate rollercoaster.

 

Trend towards rate fixing slows

Since the beginning of the New Year, the proportion of recent home loans going onto a set rate has slowed substantially. It's as if the following rise in the money rate come in the middle of the entire year, or even later, so more homeowners might be looking to fix in a number of months.

 

Discount rate loans booming

However, discount rate loans have grown to be steadily popular over the past Twelve months, and in January represented 23.6% of recent home loan approvals. Standard variable rates, though, are the favourite with around 30.7% of recent approvals for standard variable rate loans.

 

Should I select a fixed rate mortgage loan?

There are several points to consider in deciding whether or not to choose a variable or fixed interest rate loan:

• Variable rate loans are often slightly cheaper than fixed rates


• There is really a switching fee to alter from variable to fixed interest rate - although it is usually quite manageable. Commbank's happens to be $70.


• Fixed rate loans might not allow you to make extra repayments as freely - you might have a cap on extras, or might not be allowed to make any extra repayments.


• There is generally no choice to withdraw extra repayments from the fixed rate home loan


• Usually, repayment holidays aren't allowed

 

In general, fixed interest rate loans are as restrictive for homeowners because they are for banks ... therefore if the interest rate is not rising, it can feel like you're paying reasonably limited for practically nothing.

 

However, when the rate's rising you'll be very glad to not be some of those 'struggling Aussies' battling with rate of interest rises.

 

There are lots of news articles and predictions on the net, with expert opinions that inform us when the rate of interest will go up. The secret then will be relatively certain rates won't drop an excessive amount of during your fixed term ... and that's more tricky! Simply watching the news and being prepared to act can help you keep your mortgage loan repayments low.