Mortgage News

Good news for borrowers as competition between banks appears quite strong at the moment.  Most of the major banks have cut their one, two and three year fixed rates despite no significant decline in swap rates which underpin lending rates. 

Shorter term one and two year rates are popular amongst borrowers due to their perceived value while some also consider the three year rate a good move.  But ultimately it’s important to consider spreading your risk by borrowing over a number of fixed terms to reduce your exposure to unexpected interest rate rises. 

Fix or Float? 

This decision really comes down to borrowers individual circumstances. 

Floating gives you the flexibility to repay large sums of your loan with no penalty.  This might suit someone who is considering selling their property, expecting an inheritance or has a large fluctuating income for example.  However, floating rates are higher than fixed so you do pay for the convenience. 

With fixed rates in the low to mid 4’s, if you’re after value and certainty in repayments, fixing is a good option.  Better still, have a small portion of your loan set up as a revolving credit facility so you can offset your income and savings and fix the rest.  This could save you thousands of dollars in interest over the term of your loan, far more than the modest interest rate cuts the banks like to sway customers with. 

For advice on the best way to structure your home loan, contact Jiji.

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