Fixed rate home loans continue to offer outstanding value, yet research shows many borrowers are letting their emotions get in the way of a good deal.
Reserve Bank data shows in October 2013, the average 3-year fixed standard home loan rate rose above the average discounted standard variable rate by 0.15% p.a. for the first time in more than two years. In November the gap between fixed and variable widened to 0.20%.*
At the same time, a study by ME Bank found close to one in two home owners say they would be put off fixing if fixed rates moved higher than their current variable rate.^
On one hand that’s an understandable response, after all, we like to see a fixed rate deliver immediate savings. However it pays to bear in mind that fixed rates are currently at their lowest in years – and with plenty of room for rates to go up in 2014 and not much scope for rates to fall further, some economists are tipping rates could start to head north in 2014. Surprisingly though, the same ME Bank research highlights that only 17% of borrowers with a variable loan were currently considering fixing. That’s despite 57% indicating ‘locking in a low rate’ is a key reason for fixing a home loan.
While some fixed rates may be trending upwards, with a bit of shopping around it’s still possible to secure a fixed rate below 5.00% p.a., such as ME Bank’s 3-year fixed rate of 4.84% (comparison rate 5.25%). That’s much lower than plenty of variable rates currently on the market.
To take advantage of fixed rates that remain extremely competitive, call ME Bank on 13 15 63 or visit mebank.com.au.
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