5 year fixed rate
Who has the lowest 5 year fixed rate?
Getting the best fixed rate is as simple as searching the internet for the lowest advertised rates right? Actually many major lenders offer discount packages on their fixed rate loans that can only be negotiated. For this reason most people use a mortgage broker to help them find the lowest rate on their 5 year fixed home loan.
Different banks, different rates
Unlike with variable rates where most major banks tend to match each other, fixed rate loans rates tend to vary between the banks. This is because fixed rates change every few weeks so it is easier for the banks to get away with playing tricks with the pricing of their loans. Also the economists working for each of the banks have different opinions as to the likely direction of interest rates in the future.
As a result the major banks have large differences in their 5 year fixed rates!
Why is it better to fix for 5 years?
Choosing when to fix your rate and for how long isn’t an exact science. Unfortunately we can’t predict the likely future of interest rates, so you can only use an educated guess to work out if now is the right time for you to lock in your repayments. You should fix for 5 years if you believe that rates are likely to be higher than they are now for the medium term. The other time that you should fix your loan is if there is a high likelihood that a spike in your repayments will push you over your limit.
When is it not a good time to fix?
Try to avoid fixing your rate during times of economic volatility. The banks tend to increase their fixed rates in an attempt to cash in on peoples fear! The best time to fix is during the “calm before the storm”, which of course is easy to see with hindsight, but nearly impossible to predict in reality. Fix when the market is stable, to protect yourself when the market is unstable. If the market is already unstable fixing your rate should be considered to be “damage control”.
When is a 5 year fixed home loan not suitable for me?
Of course not everybody should fix their rate. A 5 year fixed rate will be unsuitable if you:
- Are planning to make significant extra repayments on your loan.
- Believe that you may sell your property.
- Need a flexible loan such as a line of credit or 100% offset facility.
How do I apply for a fixed rate loan?
Contact us or enquire online and one of our mortgage brokers will contact you to discuss your options.
