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Attractive pricing on fixed rate home loans is expected to entice an increasing numbers of home buyers to lock in a fixed interest rate.
Banks and non-bank lenders alike have continuously slashed their fixed rates over recent weeks.
Just this week Bankwest reduced its three year fixed rate by 0.44 per cent to 6.94 per cent while ING DIRECT cuts its fixed rates by as much as 0.50 per cent last week – the latest in a string of fixed rate reductions for the bank.
ANZ, NAB and Suncorp are just some of the other lenders sharpening the pricing on their fixed rate products.
According to Robert Mellor, managing director of research and analysis group BIS Shrapnel, the time to lock in a fixed rate home loan is now.
“Fixed rates are currently very reasonably priced. Lenders have seen that there is a market there and they are slashing their rates accordingly,” he says.
A look at Bankwest’s current interest rates highlights the lure of current fixed rates.
The bank’s standard variable interest rate currently sits at 7.30 per cent while its three year fixed rate sits at 6.94 per cent and its five year at 7.49 per cent – just 0.19 per cent higher than the standard variable rate.
With the prospect that variable mortgage rates will rise over the next year at least, fixed rates are likely to appeal to many first time buyers buyers looking for certainty in their home loan rate.
Of course locking in a fixed rate has its disadvantages, including the fact that if rates do drop in the future you may be paying more on your repayments compared to being on a variable rate. It’s therefore essential that you consider your longer term plans carefully when contemplating locking yourself into a home loan arrangement that lasts several years.