 Mortgage rates debate
The debate over fixed rate or variable rate home loans continues, as home loan experts warn us not to lock in a fixed rate just yet.
Financial comparison company RateCity says it is cheaper for borrowers to remain with a variable home loan rate for the next five years rather than switching to a fixed rate as the latter generally has a higher interest rate.
RateCity indicates that borrowers on a variable mortgage could still save money, even if the Reserve Bank of Australia did as predicted and raised the cash rate a full two per cent over the next 12 months.
"Even if variable rates may rise, fixed rates are also likely to rise, which means they're still going to be up to two per cent higher on average (than) variable rates at the moment," RateCity spokeswoman Michelle Hutchison said.
Many economists and home loan insiders expect rates to rise later this year by up to one per cent.
On Friday, the RBA hinted that rates could rise to a more normal level if global and domestic economies improved.
Last week, the RBA left the cash rate at a 49-year low of three per cent, but left strong indications that the downward trend was over.
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