Since 2008, the official interest rate set by the Reserve Bank of Australia (RBA) has experienced a continued decline to reach all-time lows in 2020.
In recent months there has been a growing expectation the next move from the RBA will be to lift rates. This is on the back of improved unemployment, trade, and economic indicators.
Many lenders have already begun increasing rates on their debt products in anticipation of an official move from the RBA. It’s also seen as a move to improve profitability in what has been an extremely competitive environment.
With this in mind, some property owners are moving to lock in these low rates with a fixed rate mortgage product.
Before deciding to fix all or part of your home loan, there are some important considerations.
With a fixed rate loan, you often have limited capacity to make extra repayments and there are early exit fees if you wish to vary or exit the loan before the fixed term expires.
In addition, fixed rate products do not typically allow you to have an offset account.
The certainty is a positive, the lack of flexibility is not.
To have the best of both worlds you may consider splitting your loan, part fixed, part variable.
One thing is for certain, interest can’t stay as low as they have been forever. Fixing your home loan may assist in providing greater certainty and more importantly a cheaper rate.
To consider your options call our office to chat to our in-house property and lending specialist, Courtney Robinson.
We have offices in Geelong and the Surf Coast and pride ourselves on being easy to reach on (03) 5224 2700.