Fixed rates are the new trend in home loans.
Article by Mozo
While in years gone by, traditionally home buyers would find more benefit in a variable interest rate home loan, nowadays the tables have turned, according to the Sydney Morning Herald.
"There are fixed rates out there now that are half a percent lower than variable rates, so blind Freddy could see that it's a good idea to fix at 4.95 percent," said John Symonds of Aussie home loans.
And it's first time buyers who are finding the low fixed rates as an attractive option to entering the market.
"Fixed loans have become increasingly popular with younger buyers who are prepared to do the maths and push for a better deal," said LJ Hooker deputy chairman, L Janusz Hooker.
The key reason being that fixed rates offer buyers the opportunity to plan ahead, treating their home loan as a regular bill rather than an unknown variable.
With fixed 1 year rates as low as 4.79 percent and even 3 year rates from 4.99 percent now available in Australia, first home buyers can lock in a fixed rate that can be planned into their monthly budgets for years ahead, giving them confidence that they will not fall short if interest rates take an unfavourable turn down the line.
"Home loans traditionally are like a storage unit, once you have your gear stored, you leave it in there and few bother changing loans for a better, cheaper deal," according to Mr Hooker.
So it's not just first home buyers who will benefit from a home loan comparison. With interest rates cut by 1.75 basis points since November 2011, a lot of Australians could possibley find significantly better deals in the current market, compared to their original home loan agreement that they may still be sitting on.
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