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Updated
July 16, 2018 18:46:52
With interest rates close to record lows, borrowers were asked to opt for fixed rate mortgages, if circumstances permit.
This recommendation comes from the Canstar comparison site – while several banks started offering fixed loans. Macquarie Bank and Aussie Home Loans are just some of the lenders who have recently lowered their fixed mortgage rates by 10 basis points, while increasing their variable mortgage loans by 5-10 basis points (0.05 – "Our database shows that the three-year average fixed rate is currently 4.12%, while the average floating rate is currently 4.28%, "said Sally Tindall, Research Manager at Rate City. [19659003Frenchmortgageloansareattractingtaxpayers'interesthigherinterestthanvariablerealestate
"Fixed rates are generally an indicator of market direction and, at present, banks are uncertain." [1 9659008] Why Uncertainty?
In recent weeks, smaller retail banks like Auswide Bank, Bank of Queensland and IMB Bank have imposed off-cycle mortgage rate increases – even though the Reserve Bank (RBA) should not "Retail banks are under a lot of pressure because their financing costs are rising, even though the RBA has not moved," said Steve Mickenbecker, Canstar's director of financial services. One of the reasons banks are facing fast-growing short-term borrowing costs is the policy of the Federal Reserve and the European Central Bank to tighten their monetary policies
. "The problem is that most of their financing costs are variable rate, and most of their loans, as a result, are also variable rate."
M's News Therefore, some banks have decided to reduce their fixed mortgage rates because they must remain competitive, and promote cheaper real estate loans like their interest rates. "
"Complacency
Mr. Mickenbecker observed many borrowers are" complacent "when it comes to keeping abad of current interest rates.
" Most People have variable loans because it's easy to do nothing. "But there is a lot of trouble when rates go up, and borrowers start thinking about moving to a fixed rate."
"Unfortunately, the horse has already moved up a gear, and they set their rates at the top of the rate cycle.
"There is a good chance that we are" fixed "for some of your loans – you get the flexibility you want."
The example He provided a borrower who took out a mortgage before the global financial crisis at 7-8 percent.
At a variable rate, their mortgage repayments can now fall below 4.5 percent.
"While it looks like a good deal – if you do not think about it – there could be better deals around 3.8 percent if you were looking for them."
Not for Everyone
The main advantage of fixed rate mortgages is that they budgeting is easier, in that the borrowers know exactly what their repayments will be each month.
If the rates of As interest rates rise, fixed-rate mortgage borrowers are protected against increasing their repayments. "
" But with rates as low as they currently are, this risk is not there. not as big, "said Mickenbecker
a higher risk if the rates were as high as 7-8 percent."
Additional refunds, which are often not allowed for fixed-rate loans, or capped at a small amount high.
In addition, under the terms of the fixed loan, there may even be a break fee if one changes or repays its loan before the end of the fixed-rate period.
Topics:
business-economics-and-finance
consumer-finance,
the housing industry,
economic trends,
Australia
Published
July 16, 2018 18:11:58
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