{"id":10598,"date":"2017-02-23T15:00:03","date_gmt":"2017-02-23T04:00:03","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=10598"},"modified":"2017-02-23T15:00:03","modified_gmt":"2017-02-23T04:00:03","slug":"is-it-time-to-fix-your-loan","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/is-it-time-to-fix-your-loan\/","title":{"rendered":"Is it time to fix your loan?"},"content":{"rendered":"

In his column for\u00a0Switzer<\/a>, John McGrath discusses if borrowers should consider\u00a0fixing\u00a0their loans.\u00a0<\/strong><\/p>\n

Here’s what he had to say:<\/h4>\n

In recent times, most lenders have moved independently of the Reserve Bank and raised their fixed rates.\u00a0\"mcgrath\"<\/a>
\nSome have raised variable rates, too.
\nThere\u2019s also a difference in the rates offered to investors versus owner occupiers, with owner occupiers tending to receive more favourable treatment.
\nAll of this prompts the question, particularly for investors: is it time to fix your loan?
\nI had a chat with Alan Hemmings, General Manager of McGrath\u2019s mortgage broking division, Oxygen Home Loans, and asked him whether borrowers should consider fixing now.<\/p>\n

Here\u2019s what he had to say:<\/h4>\n

\u201cThe average three-year fixed rate over the past three years has been 4.69%, so with fixed rates available today below this figure it is still an opportune time to fix now.
\nThere are still fixed rates available below 4%, too. \u00a0\"piggy
\n\u201cLenders have been increasing their fixed rates mainly due to the increasing cost of funding these particular loans.
\nFixed rates are funded from several sources including other banks, customers\u2019 deposit funds and overseas markets.
\nRecently, we have seen the cost of funds from overseas markets increase, therefore the banks are passing this on to the customer.
\n\u201cAt present, there is very little difference between fixed and variable rates, particularly when comparing some of the specials being offered by lenders across both variable and fixed loans of up to three years.
\n\u201cIf you\u2019re considering fixing, you need to have a clear understanding of your circumstances over the next period of time.
\nFor example, do you want certainty with your repayments?
\nAre you planning on adding to your family?
\nWould you possibly want to sell in the near future?
\n\u201cWorking with a broker will assist in making the best decision to suit your needs.
\nThat might be fixing your entire loan, or perhaps only a portion of it to give you flexibility.\u201d
\nI also asked Alan what he expects in terms of Reserve Bank decisions on official rates this year.
\n\u201cGiven the moves by banks to increase fixed rate loans, this probably means the next official interest rate movement will be an increase.
\nMost economists are now predicting this, the debate is about when.
\n\u201cIrrespective of what the RBA does, we continue to see banks move on interest rates and not just in the fixed rate area.
\nRecently, we have seen some lenders increase variable rates for investors.\u201d<\/p><\/blockquote>\n

Personally, when I\u2019ve borrowed money to buy property I\u2019ve consistently used variable interest rate finance.\u00a0\"reserve
\nBut if I did sense that an upswing in interest rates was likely, or that I might have some issues with my cash flow in the medium term, I\u2019d be locking in a fixed rate straight away.
\nDetermining what is best for you comes down to your individual goals and circumstances but to help you make the decision, Alan has provided his top pros and cons to fixing your loan.<\/p>\n

Advantages of fixing your home loan<\/h4>\n