Thinking of fixing your home loan interest rate? Think again

With most pundits, includingMr Mortgageexpecting the RBA to reduce the cash rate by 0.5% this month, it would be folly to fix your rate right now.
I realise that the “security” of a fixed interest rate may seem attractive in these uncertain times, but isn’t that precisely the reason why you should stay uncommitted?
Yes I also realise that the Major banks may not pass on the full reduction, but is that any reason the do what they want you to do? I believe not. I fixed my rate two years ago at 7.09%.
I believe we could be headed their again. It all depends on how things pan out with the US ressue package. If as suspect that it has little effect, then US credit costs will lower, and that may mean that Australia follows suit.
My belief is that the trillion dollar bail out is too small and too late to have a lasting effect, and that would mean interest rates heading South in the US and a likely flow on here, but with one caveat. A much harder time to get new credit, in the US, the UK and in Australia. Easy money will be harder to come by.
In fact some people are predicting the end of lo-doc home loan lending, at least from mainstream lenders.
So if I were you in this market I would keep with your variable hone loan as is and wait and see what the trend in interest rates, and then make the trend your friend.

About the Author

Rick Adlam Has Written 141 Articles For Us!

Rick Adlam has been involved in mortgage finance since 1996 with Equity Home Loans as a Founding Partner. Rick created Mr Mortgage™ in 1999, one of Australia's first online mortgage brokers. As a mortgage introducer Rick specializes in helping his clients get approved for low interest mortgage loans with no ongoing fees and charges, and low doc home loans for the self employed.

Getting The Latest Tweet...

Did you know Rick has a website? Go see what you're missing...

Related posts:

1. Rick Adlam has put up his personal web site
2. 8 home loan application mistakes that can get your lenders approval
3. Are Mortgage Brokers honest with home buyers and refinancing homeowners?
4. Interest rates to stay low for months
5. Reserve Bank of Australia Governor hints at mortgage interest rate rise