 Interest rate predictions
Despite predictions that interest rates will rise soon, experts are urging home owners to stick with variable loans.
Experts say fixed rates are increasing enough to make it unattractive, unless you are a very conservative borrower.
Three-year fixed rates are now at around 1.5 percentage points more than the average variable rate - a margin equivalent to six, quarter-point rate rises. Aussie Home Loans executive chairman John Symond advises against locking in a fixed rate today saying it will take six rate increases before a variable rate would be more expensive."You are better off taking the savings today," he says.
Economists and money markets are predicting that interest rates will start rising early 2010 and the cash rate could rise by around 0.4 percentage points early on.
But, given that the rate on most variable mortgages is only about 5.5 per cent - once you factor in the 0.7 percentage point discount on most loans - there is plenty of room to absorb a few rate hikes and still be ahead.
National Australia Bank chief economist Alan Oster says it's "about 50-50 whether rates will stay flat or fall within the next few months".
Commsec chief equities economist Craig James says rates may rise next year, "but it will be a slow journey upwards and probably will only rise by 2 per cent from today's levels by 2012".
Do you want to fix your rate or are you holding out to see where they go? Tell us your views on our online forum.
Join the discussion on Interest Rates - Up or Down?
|