 Fixed versus variable
Rates rise, and rates fall, that's life. But for the 60,000 households who fixed their mortgage repayments last year to shelter from the constant increases, the now falling rates are stinging.
As mortgage interest rates crept well into the 9% mark, some feared 10% was not too far off. Fixing the home loan at around 8% or 9% seemed like a good idea, but now those homeowners face paying up to $636 a month more than those on present variable rates on a $250,000 mortgage.
Senior Canstar Cannex analyst Harry Senlitonga suggests fixing your home loan could be a safe option.
"No one knows which way is the right way to go but you can always split the loan," Senlitonga says.
"At least you're going to be half right and half wrong."
Breaking out of a fixed mortgage can be costly, and in many cases, simply not worth it.
Generally, lenders have their own financial contract to help fund a fixed rate mortgage and these fees are designed to compensate for any losses a lender incurs for breaking such an agreement.
Break fees do vary from lender to lender so it is worth checking what your lender would charge, then calculate if the savings made would be swallowed up with the break fees.
And while those with a fixed rate mortgage may be unhappy now, rates will rise again at some point and then the fixed rate may seem a lot more attractive.
For anyone on a variable rate mortgage, now may be the time to look at fixing the rate, while they are as low as 5.5% before rates rise again as expected next year.
Join the discussion on Fixed Interest Rate Home Loans
|