Westpac forecasts higher interests rates: Borrowers warned to brace for higher repayments
Monthly repayments could soon cost borrowers a lot more cash if Westpac’s predictions for rate rises do come to fruit...
The case for fixing your loan is becoming increasingly compelling, with figures at an attractive level and no certainty of further cuts according to Smartline Personal Mortgage Advisers.
Having calculated the potential savings, with some set to save up to $5,500 per year by locking in their mortgage at the lowest fixed rate available, it’s becoming a good option, said Smartline’s Michael Daniels.
For one major bank, over the past 14 years the basic variable interest rate has averaged 6.85 per cent per annum, he modeled. The same bank now offers 4.99 per cent for a three-year fixed rate, equating to savings of $5,500 on a $300,000 mortgage.
“This is the very reason why a third of our clients are taking out fixed rate loans,” said Mr Daniels. “When you crunch the numbers on the savings, it’s a pretty compelling argument.
“There are many more who are considering a fixed rate, but who don’t want to lock themselves into a fixed rate in case rates drop further.”
He noted this is the most common concern for those looking to fix, but argued, “While fixed rates might drop a little bit further – but I wouldn’t say it’s a certainty – the fact is the fixed rates currently on offer are historically low”.
In fact, he said, when fixed rates go up it happens more quickly than when they come down.