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

Daily Mercury - - MONEY SAVER -

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 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.

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