With the RBA lowering the cash rate to a record low of 2%, some borrowers continue to consider the age old dilemma whether to fix or not to fix. Personally I’m not an advocate for fixed rates however in the current environment it may be worth checking out.
Not that long ago clients were locking in a fixed rate in the 5’s, so it is definitely important to undertake your research and seek expert advice from your Mortgage Broker.
Remember that the banks have expert analysts studying money markets continuously and diligently, so you need to follow the market indicators. A good strategy is to research a cross-section of 3 year fixed rates compared to the best variable rate that your circumstances allow you to negotiate. As you would know standard variable rates are negotiable depending on your loan amount and the bank’s appetite for market share.
As of this week the best 6 fixed rate loans were all 3.99% for 3 years. One of the most competitive variable rates at the moment is in the low 4’s. So in this example, considering that everyone’s circumstances are different, the average of the 3 year fixed rates are slightly lower than the best of the variable rates available. From this information you could assume that the experts believe that the cash rate is likely to hold steady for a while or even be in for another cut in the short term.
Of course you can always hedge your bet and fix only half of your loan.
The other consideration when reviewing your rate is that a premium will be charged for Lo Doc loans or borrowers with credit issues.
At the end of the day the great news for borrowers (unfortunately not for retirees) is that interest rates are at their lowest for nearly 40 years. As sure as night follows day rates will rise in the future so do not over-commit and use the savings to create a fighting fund for the future.
If you would like a no obligation loan check up, please call me on 0409 02 99 22 or email greg.clough@onyx.net.au and I’d be more than happy to assist you.
You may also have a relative, friend or colleague that you believe needs assistance or is searching for a solution, please refer them at our website www.onyxfinance.com.au and qualify for a $250 De Groots Restaurant Card.
Have a great week!
Warm Regards,
Greg W Clough
Owner & Founder