Fixed rate offerings pretty hard to resist: Loan Market

Larry SchlesingerOctober 17, 2012

Borrowers should look to fix at least part of their home loan as fixed rates continue to fall, according to mortgage broker Loan Market.

“Investors and families on tight budgets should really be looking to lock in some rates as they hit near record lows,” says Loan Market corporate spokesman Paul Smith.

“Lenders are coming out with three year fixed rates as low as 5.35%. Historically, it always pays off to fix rates when they are on the way down, as opposed to what most people do in fear, which is fix on the way up.

“Many people were caught out fixing on high rates post recovery during the GFC when lenders began lifting their rates and confidence returned to the market. Right now, these fixed rates are already a quarter percentage point below variable rates, so even if variables dropped one more time this year, they would still be ahead. 

“Could rates dip below 5%? Possibly, but rates right now are pretty hard to resist the gamble and waiting game.

Smith says that borrowers with higher incomes can afford to ride the variable wave a little longer or look at fixing half of their rates and continue paying extra into their variable loans.

“Obviously, consumers should be aware that when the market recovers, these all-time low fixed rates will disappear pretty quick and borrowers will start to scramble for the lender slowest to react and pick up leftovers.”

Currently the cheapest one-year fixed rate home loan is 5.29% offered by Greater Building Socieity while the cheapest three-year fixed is 5.35% offered by loans.com.au.

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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