Fixed rate home loans: the new flexible finance

Fixed rates are becoming an increasingly attractive option today, especially given interest rate levels are at an all-time low for many lenders.  As such, the big banks are aggressively competing in the 3-5 year fixed rate market and we are witnessing phenomenally low rates, which is great news for the home buyer!

If you’re not a big fan of fixed rates, it’s understandable. Traditionally, there were many disadvantages of fixing your loan, such as limited flexibility around paying off extra or having to open an offset account. These disadvantages are somewhat diminishing with a number of smaller lenders leading the curve and driving innovation. Many now offer a fixed rate loan with an offset account, while allowing you to make additional repayments at a rate that’s lower than the big banks anyway!

 

If you’re still feeling unsettled about a fixed rate, consider this: The RBA cash rate has not moved from 2.50% p.a. for 13 consecutive months. To add some additional comfort, the ASX futures curve predicts another 15 months of cash rate stability!
But which term length should you choose?

 

Today, variable home loan rates can vary between 4.65% p.a. and 5.10% p.a. depending on who you borrow from.  Five year fixed rates have dropped spectacularly, with all of the “Big 4” lenders offering 4.99% p.a.  It is truly remarkable that we’ve fallen under 5% p.a.

If five years feels like a life sentence, you might want to consider a three year fixed rate. A reputable “non-major” lender is currently offering 4.69% p.a.

 

If you’re feeling confident that your circumstances won’t change much in the next 3-5 years, it would be wise to consider fixing your rate. It might just save you many dollars!

 

 

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Shannon Ingram – Personal Mortgage Adviser : www.smartline.com.au/singram

Award winning mortgage broker Shannon Ingram became a Smartline Personal Mortgage Adviser in 2010, after eight years working for a major Australian bank.

Along with his wife, Shannon has bought and sold several properties. This gives him invaluable insight into his client’s experience. This resulted in Shannon winning the Smartline NSW/ACT Client Service Award in 2012. “I know from first-hand experience how stressful a time buying a property can be,” he said of his property purchases. “As a result, I always do my best to go above and beyond expectations and to do whatever is necessary to ensure a smooth process to get my clients into their new home.”

With all of the choices available on the market, Shannon believes a quality mortgage adviser can hand-pick the most appropriate option for every individual situation. “The right loan is going to be one that meets all of my client’s needs – including, of course, interest rate and fees, but also things like service levels and loan features.”

Managing the loan from start to finish enables Shannon to coordinate the best outcome between the client and the lender. He is happy to assist with any property purchase or refinancing arrangements.