 Fixed versus variable rate
Mortgage experts are wary of the rush to fix home loan rates. Many home owners are now looking to fix their mortgage rate, following the Reserve Bank's decision yesterday to keep rates on hold.
Many homeowners feel that this could signal the beginning of a rate rise cycle and want to fix their rate now before they climb higher.
However, Aussie Home Loans executive chairman John Symond said variable rates might fall further while fixed rates had jumped by at least 1 per cent over the past two months.
"I wouldn't rush in to fix at the moment," he said.
Mr Symond said the downside of fixing now was having to accept an interest rate of up to 1.5 per cent higher than the variable rate.
"A lot of people don't realise that when you do fix your whole loan you lose many of the features that give you the flexibility of paying extra payments, having redraw, splitting your loan and all the rest of it," Mr Symond said.
Mortgage Choice corporate affairs manager Kristy Sheppard said fixed-rate loans would "almost certainly" be more expensive in the next few months "because long-term funding costs for lending institutions are on the rise".
Myrate managing director Kevin Sherman said fixing might be good for those seeking repayment certainty, but it was difficult to pick the best time to fix.
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