To Fix Or Not To Fix?
The Reserve Bank of Australia left the Cash Rate steady again at 4.25% following their April meeting. In March we saw many lenders lift rates slightly, moving out of step with RBA, arguing that their “cost of funds” had and will continue to increase due to international factors.
In most cases it was a modest increase, but the question being asked by many is: “Should you consider a fixed interest rate?”
That question was posed in an online poll by one of Australia’s larger home loan brokers. The response was typical of the uncertainty and confusion about the direction of home loan interest rates, with 46 per cent saying they were definitely considering a fixed rate; 14 per cent said they might fix part of their home loan; 36 per cent said they would not fix’ and four per cent said they were unsure.
With the Euro debt crisis still unresolved and attractive fixed home loans still available, it might be tempting to seek the comfort of locking in a mortgage rate for a few years.
However, you need to ensure that you’re locking in for the right reasons. Many had locked in rates before the global financial crisis of 2008 only to watch the RBA cut the cash rate to three per cent.
What to do?
Give me a call and have a chat about it with me