Aussies missing a trick with fixed rate home loans

Thursday 28 May 2009

Article by Mozo

Australians are at risk of missing out on the historically low interest rates because of a reluctance to lock into their home loan, one analyst claims.

Speaking to the Sydney Morning Herald, AMP Capital’s chief economist Shane Oliver says that most homeowners get the timing of switching to a fixed-rate home loan all wrong.

Indeed, figures from the Australian Bureau of Statistics have shown that interest in fixed deals peaked in November 2007, when the Reserve Bank had pushed up interest rates for the ninth time in a row.

And now, with interest rates at their lowest level since the 1960s, Aussies are reluctant to take advantage of a fixed deal, instead preferring to hold out in the hope of further cuts.

"People have probably got the next six to nine months to fix their loans and take advantage of current deals," Mr Oliver warned.

The Reserve Bank’s official cash rate currently stands at three per cent, with many analysts expecting the bank to avoid any further cuts when it meets next month.

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