Don't fix without asking for advice: Loan Market

Consumers should seek advice if they are considering fixing their home loan rate, mortgage broker Loan Market says.

The broker says many analysts are predicting an end to the downward interest rate cycle.

Loan Market director Mark De Martino said nearly one-in-two home loan inquiries in October related to home loan fixing. He said fixed loans were popular because of warning signs that rates are heading back up.

"Many homeowners and buyers mistakenly think the best time to fix your interest rate is just before they head up, when, really, the best time to fix your interest rate depends more on your personal circumstances than what the market is doing."

De Martino suggests borrowers consider their lifestyles, financial goals and property plans before choosing their loan type. They can then consider when and if they should act in anticipation of rates dropping.

"Borrowers need to ensure they are locking into a fixed rate for the right reasons, such as certainty of repayment and peace of mind, rather than as a speculative play on where rates are going to move.

"A home loan is something that a borrower will carry for decades and they will likely see several interest rate cycles. Fixing into a historically low interest rate right now for the first two or three years is attractive but that strategy needs to match the personal goals of the borrower."

De Martino said nearly half of all homeowners used a mortgage broker to help them figure out if a fixed interest rate matched their personal situation and financial goals.

"Mortgage brokers are the best advocates for responsible borrowing," he said. "They’ll make sure the client is put into a home loan that will allow them to live the lifestyle of their choosing."