Fixed rates gain popularity
Despite widespread speculation that the RBA will keep interest rates on hold when it meets early next week, one mortgage broker believes more borrowers will look to take out a fixed rate mortgage.
Data from Loan Market Group has found that borrowers are still nervous about the future of standard variable rates and may prefer the stability of a fixed rate mortgage.
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In addition, the brokerage’s national operations and risk manager Ivan Karamatic said the fixed rates market had become highly competitive in recent months with several lenders offering big cuts on their fixed rate products.
“Some fixed rate packages on offer are only slightly higher than some of the basic variable rates,” he said.
“In some instances the difference between a three-year fixed rate and that of a basic variable is as little as 0.25 per cent.
“That’s only one RBA interest rate hike away from mortgage holders being potentially better off with a fixed rate loan.”
Mr Karamatic said Loan Market had received a growing number of enquiries about fixed rates.
“To some people, a fixed rate can offer peace of mind in an unpredictable interest rate environment,” he said.
