Time to review your mortgage

Banks are pushing up their home loan variable rates, so is now the best time to fix your interest rate? Sophie Elsworth answers that question

BORROWERS unsure whether to lock in their interest rate should be reviewing their mortgage now, as many lenders are rolling out rock bottom fixed-rate deals.

Variable rates are still cheaper than the best threeyear fixed-rate terms available, but customers need to be prepared for rises.

In the past few weeks Westpac, ANZ and the Commonwealth Bank have all pushed up their variable rate deals but NAB has bucked the trend and stayed idle.

Analysis by financial services firm Canstar has revealed that for a borrower with a $300,000 30-year home loan deal, the lowest variable rate is 3.44 per cent.

This compares to the cheapest three-year fixed rate at 3.69 per cent.

Canstar’s finance expert Steve Mickenbecker said the many rate fluctuations in the market recently made it “a good time to consider fixing all or part of your borrowings”.

“On an average loan of $300,000 over 30 years, the difference between the highest and lowest three-year fixed rate offers can be as much as $240 per month, or close to an extra $3000 per year,” he said.

“Right now lenders have been moving fixed rates down for the spring selling season.”

Three-year fixed rates are a popular term for borrowers to lock in their rate.

The Reserve Bank of Australia has failed to move the cash rate from 1.5 per cent since August 2016, but despite this, lenders are still moving rates up and down as they please.

So a fixed rate is a good Comparison rate 4.13% Monthly repayment $1379 option for borrowers looking for security against rising rates, or alternatively they can lock in a portion of their loan.

However, there are break costs if a customer is looking to break the loan early, for example, if they need to refinance or sell up.

Aussie Home Loans’ CEO, James Symond, said borrowers should certainly be reviewing their loans.

“With interest rates edging up it is definitely worth borrowers inquiring about whether to fix part or all of their mortgages,” he said.

“Fixed rates provide certainty of repayments so households can budget their monthly expenses accurately.”

Mr Symond said the next move for official interest rates would be up and borrowers needed to be prepared.