– Fixing your Loan
Australians have a love-hate relationship with fixed mortgage rates. Media-driven panic coerced many people into fixing at 8% just before the backside fell out of the economy and interest rates dropped to all time lows post-GFC, and they got stuck with rates 3% above market and paying a massive premium.
However, times have changed, and rates are still very low, with fixed rates out to 3 and 5 years running at record lows in Australia. This has seen a spike in popularity, and certainly these products can provide an “insurance policy” against interest rate rises for a few years, and that certainty is drawing a lot of people into them, so that 1 in 4 loans are utilising fixed rate products at the moment.
Similarly, in Canada – whose market is similar in many ways to Australia – a CIBC survey earlier this year showed that 48% would choose fixed, a marked increase over previous surveys. Maybe this is an indicator for consumer sentiment in Australia. Will we see a rise in the popularity of fixed rate home loans? They seem to be pretty popular right now, as people are fixing into low rates for a longer period as an “insurance policy” against rate increases.
Is it right for you? Talk to us about it and we can help you make an informed decision.