Experts advise that when we near the end of the interest rate cycle that when it’s time to start fixing rates. But how do we know for sure that the right time is approaching?
Fixing your home loan rate is a hard decision to make. When some Australian banks set about increasing their fixed home loan rates it can make variable interest rates look more attractive.
However, by staying with a variable rate some borrowers could end up missing out on fixed deals when interest rates climb back up.
If you’re having a hard time deciding to fix, here are some arguments for and against:
Pros of fixing
- Fixed rates will allow you to budget your finances accurately over the life of the fixed term
- You’ll know exactly how much interest you need to pay each month regardless of any RBA changes
Cons of fixing
- You can only make minimum repayments so there’s no advantage of reducing the interest on your loan
- You may have to pay a penalty if you move house or pay back your loan early – known as break costs or early establishment fees