Fixed-rate home loans 'ideal for those on financial tightrope'

Monday 10 October 2011

Article by Mozo

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.

Fixed-rate home loans 'useful for those on a tight budget'

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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