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Why Now is a Great Time to Lock in Your Mortgage

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The present time is a good time to act if you want to buy a property or lock in a fixed rate home loan, as cash rates are likely to rise in the near future. While the official interest rate is near an all-time low, this state of affairs won’t last forever.

Lenders’ rates are based on the official cash rate, which has been maintained at 2.5% since mid-2013. However, there are expectations that the Reserve Bank may adjust this upwards later in 2014, after September or October.

According to Marie Mortimer, General Manager at Loans.com.au, “When deciding whether to choose a fixed or variable rate for your home loan don’t look at what is happening right now, while rates are low. A bit of foresight is what’s needed – many say with rates so low the only way is up over the coming years.”

You should note that rates for longer-term fixed loans are already on the rise. While the best time for locking in a fixed rate home loan may be three months ago, there is still a good amount of time to act if you haven’t already done so. Fixed rates are still fairly low in comparison to 5-5.6% for basic and standard variable rates.

“There is a chance rates will dip one more time over the next calendar year but after that we may see them start to climb. Either way, if certainty is what you need to be sure your household budget will still balance, a fixed rate loan will give you that,” Mortimer said.

In other words, it is not so much about ‘beat the banks’ but having certainty. Even if rates are lowered during the fixed period, the borrower who has fixed in his or her home loan for a given period of time has the certainty of knowing that his or her household can make the repayments if rates do in fact go up, reported the Australian Financial Review.


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