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Home » Rates are up again! To fix or not?

Rates are up again! To fix or not?

The RBA board met again today, and the result has been an increase to the cash rate of 25 basis points, to 2.60%.

I’ve had a lot of discussions with clients over the past 6 months about rates. Many are wondering whether to lock into a fixed rate, or keep their borrowings variable.

Now, fixed rates are (in the main) higher than variable rates, so any decision to fix must take this into account. Many clients are sitting tight, waiting for the rates to hit parity, or even for the fixed rates to drop below variable.

Most importantly, your reason for fixing is key. As a mortgage broker, I’m not able to advise you on whether to fix your rate or not.  Anyone doing that would be brave—it really is a huge gamble trying to guess where rates will go.

But what I can say is to have a think about why you may be wanting to fix. Perhaps you are on a single income and your budget is tight? Locking in your rate would mean that for the fixed period, you can plan your budget with confidence, knowing that if mortgage payments continue to increase, there won’t be extra financial pressure on you.

On the downside though, fixed rate loans also carry some restrictions regarding extra payments and early clearance of the loan, so your broker can explain those restrictions for you.

Please contact me if you’d like to discuss your loan and whether locking in a rate is a good option.