Fixed-rate home loans 'ideal for those on financial tightrope'
Aussies considering going online to compare home loans have been advised to consider fixed-rate products if they are concerned about the impact an increase to the cash rate would have on their financial situation.
Financial planner Glenn Fairbairn, director at Hewison Private Wealth, told National Features that fixed-rate options could provide stability for those on a tight budget.
However, he warned that borrowers are traditionally better off with variable rates and that there is always the danger with a fixed-rate mortgage that Aussies could end up paying more if there is a dip in interest rates.
Despite this, he stated: "If you are walking a financial tightrope and any interest rate increase could put you under financial stress, then fixed rates are perhaps a better way to go."
The cash rate is currently 4.75 per cent and retail figures published last week by the Australian Bureau of Statistics indicated a 0.6 per cent increase in turnover month-on-month in August, which UBS chief economist Scott Haslem said could lead the RBA to keep rates on hold for the rest of 2011.
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