FIX OR NOT TO FIX THAT IS THE QUESTION

Article from DZL Finance Brokers Yvette Fernandez

When is the best time for borrowers to fix their interest rate?

BORROWERS who are unsure on whether to lock in their interest rate should be reviewing their mortgages now as competitive fixed-rate deals are being published by various Lenders.

Customers need to be prepared for further rate rises even though variable rates with some banks may still be cheaper than the three-year fixed rate.  It should be noted that Lenders have been moving fixed rates down in line with their bank strategy and this may pose a good opportunity for Borrowers.

Three-year fixed rates are typically a popular term for borrowers to lock in their rate.  There are many reasons for this to be the case.

Even though the Reserve Bank of Australia has not moved the cash rate from 1.5 per cent since August 2016, lenders have been moving rates up and down.  As costs of funds to Lenders increase, this will be one of the key drivers for Lenders raising rates.

For borrowers looking for security against rising rates fixing is a good option or alternatively borrowers can lock in a portion of their loan.  With interest rates moving up it is definitely worth borrowers inquiring about whether to fix part or all of their mortgages.  “Fixed rates provide certainty of repayments so households can budget their monthly expenses accurately.”

However there are break costs if a customer is looking to break the loan early, for example if they need to refinance or selling up should interest rates decrease.

There is a lot of speculation that the next move for official interest rates will be up and borrowers need to be prepared for this.

Please call us to discuss the available fixed and variable rates amongst the Lenders and reviewing your options.

Yvette Fernandez      0403 343 424                          Gary Fernandez      0407 330 612

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