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Borrowers considering fixing home loan rates should act now, according to a major mortgage broker network.
John Kolenda, managing director of 1300HomeLoan, said now could be the right time to fix since some lenders have already moved on their fixed rate products.
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“It is increasingly looking like if you are considering the certainty of a fixed rate, the time to lock in may be now as some fixed rates have already started to increase,” he said.
In the past month, a number of banks, including the four majors, have increased interest rates on fixed rate products.
“Even though the RBA’s official rate remains at a record low of 2.5 per cent and could still come down, some banks have increased their fixed rate loans by around 20 basis points,” said Mr Kolenda.
“Borrowers should be aware though that while variable home loan rates are influenced primarily by the RBA’s rate movements, fixed rates are different as their pricing is driven by longer term expectations,” he added.
Mr Kolenda cautioned that most variable rates are still lower than fixed rates and borrowers should consider their financial situation and motivation for fixing before deciding if a fixed rate home loan is right for them.
“Borrowers looking to lock in a fixed rate should be doing so because they require certainty of payment and peace of mind rather than as a speculative play on which way rates are going to move,” he said.
