Several lenders have just reduced their fixed rates.
It happened shortly after Tuesday’s announcement by the Reserve Bank of Australia (RBA). One of the biggest banks in Australia reduced its fixed interest rates by up to 0.3 percentage points, dropping them to as low as 5.29%. Another lender reduced its 5-year fixed rate by a full 1.3 percentage points; others reduced their rates by around 0.6 percentage points.
At the time of publication, none of the big four banks had lowered their interest rates but that can be expected to change very soon. Once one of them makes a move, the others will almost certainly follow.
What Does This Mean For Borrowers?
It indicates that the money market and banks anticipate lower interest rates in the medium to long term. This is great news for borrowers.
However, this development does not necessarily mean fixing your mortgage now is a good idea. Fixed rates are still generally higher than most variable rates, and many economists believe there may be cause for the RBA to reduce rates in the next two years. Therefore, we can only determine if fixing your mortgage now was a wise decision in hindsight.
So, Should I Fix My Home Loan?
If you’re considering fixing your mortgage now, it’s essential to consult with an expert mortgage broker who can help you understand the potential risks and rewards of doing so. If you’re currently on a variable-rate mortgage, it may be worth considering switching to a fixed rate, especially if you’re looking for long-term stability and certainty. It’s essential to understand, however, that fixing your mortgage comes with its own set of risks. For instance, if interest rates drop, you’ll be stuck paying a fixed rate that’s more expensive than the variable rate.
There are several things you can do to prepare for the possibility of lower interest rates in the future.
- First, consider refinancing your existing mortgage to a lower interest rate. If you are able to do this, it can save you thousands of dollars in the long run.
- Second, you can consider making additional payments on your mortgage, which will reduce your principal balance faster and decrease your total interest paid over time. This strategy will put you in a better financial position when interest rates start to decline.
Ultimately, consulting with a trusted mortgage broker is essential to determining the best course of action for your circumstances. Call Home Loan Experts on 1300 889 743 or enquire online for free today!