Professionals Burleigh 
Australia’s interest rates are currently sitting at historical lows after consecutive rate drops in June and July brought the official rate to a staggering 1 per cent.
Looking to the future there’s a good chance that rates will remain where they are for a little while at least, with the Reserve Bank likely to sit back and gauge the full effects of their recent rate cuts before changing monetary policy again.
Further interest rate cuts before the year is out are still a very real possibility, but whether rates hold or drop a low-interest rate environment is here to stay for a while.
With no indications that rates will be going up any time soon, many probably don’t see the need to fix their home loan rate. But could a fixed rate still be a good idea?
Fixed rates are at record lows
There have been some huge reductions in fixed-rate options recently, meaning there are some great deals available for those willing to look at a fixed rate.
Three of the Big Four (ANZ, Commonwealth Bank and Westpac) have cut their fixed-rate home loans by as much as 96 basis points, which is nearly double the size of the RBA’s recent rate cuts.
Other lenders are also trying to lure mortgage holders to a fixed rate with a number of them offering fixed rates of less than 3 per cent, with one lender going as low as 2.79 per cent.
A fixed-rate is good for those who like security and want to have certainty when planning their financial future.
But before you fix…
Those interested in fixing their home loan rate should ask themselves how they would feel if there were further interest rate cuts and they ended up paying more than those who rode the variable wave.
Most people fix their rate when they think that rates might be on the verge of going higher, which isn’t the case at present.
A shorter fixed term of one year might be a good option for those who don’t want to lock themselves in for a long time, or a split loan is another option worth considering.
It’s important to keep in mind that everybody’s situation is different so it’s best to shop around and take your time looking at different mortgage options until you find one that suits you and your particular circumstances.
The current interest rate climate provides a good opportunity to negotiate with your lender, so whether fixed or variable, ensure you are getting the best deal you can.
