Is spring the right time to fix your home loan?
Article by Ben Tosi
Mozo’s database has seen seven lenders cut fixed home loan rates over the past few days as spring property season starts to heat up.
The rate cuts, as large as 30 basis points in some cases, are focused on Aussie homeowners who will be making principal and interest repayments on their home loan with banks looking to attract reliable borrowers this spring.
St George, Westpac, Bank of Melbourne, BankSA, CUA, Gateway Credit Union and Virgin Money all made cuts to fixed rate home loan products with one to five year terms, continuing the trend that saw 1 in 3 lenders make fixed rate cuts throughout August and September.
With RBA Governor Philip Lowe warning borrowers that rates will rise before they fall, Mozo home loan expert, Steve Jovcevski believes that these cuts could represent a good opportunity for borrowers to lock in a great rate on their home loan.
“With rates almost certain to rise before they fall, this could be the perfect time to lock in a fixed deal, as you aren’t likely to miss out on further rate cuts,” said Jovcevski.
“Property prices are starting to slow, but they’re still very high in the major hubs like Melbourne and Sydney and borrowers looking to get into the market really do need to be aware of how much difference a lower interest rate can make to their home loan. These rate cuts have come at a good time to allow borrowers to lock in a low rate and ride out any RBA changes over the next few years.” he said.
It isn’t just good news for potential homeowners, however. These rate cuts could also be music to the ears of current borrowers who feel as though they’re not getting the most out of their home loan.
“Borrowers who already have a mortgage should really look into their refinancing options and see if they can cash in on some of the lowered rates,” said Jovcevski.
If you want to find out if a fixed home loan is right for you, check out Mozo’s guide to fixed rate mortgages and check out Mozo’s Switch & Save Home Loans calculator to find out how much you could save by moving to a better home loan rate.
The pros and cons of fixed home loans
|It is easier to budget with a fixed rate because you know exactly what your monthly repayments will be||Interest rate drops won’t benefit you and you could end up paying more than you would on a variable rate|
|You don’t need to be worried about a rate rise during the fixed term||If you want to opt out of your fixed rate home loan, costly break fees apply|
|The revert rate once the term finishes is usually pretty high so be prepared to refinance|