OVER 60% OF CLIENTS ARE FIXING THEIR HOME LOANS
Since the Trump election win we have found that 63% of clients are choosing to fix their home loan. This has increased further over the last 2 weeks as Banks have decided to increase their variable rates, outside of any RBA rate change. The most popular is fixing 50% and keeping 50% variable with an 100% offset to help pay that portion down. I guess it could be seen as hedging your bets!
This was very similar to what occurred after the GFC, as those with low risk appetites decided to fix their loans. The only issue being the variable rate dropped significantly meaning most were left paying much more for the fixed portion of their loans. That’s the risk you take.
When considering a fixed rate, it is important to work out why you want to fix. Don’t fix because you think rates will go up or down. That’s like gambling and it is very tough picking the market nor beating the banks. This is their game and 9 times out of 10 they win. Fix because you want security of knowing your repayments will be $X over the next X years. If you want your cake and eat it, then fix a portion (for security) and leave the rest variable for some flexibility.
End of the day, with all loans, it really depends on a client’s individual needs and circumstances. Everyone is so different and if I had 10 people in a room, I am 100% sure each would get a different loan structure, different lender and different product.
As a comparison, at time of writing the best rates (for a $500k Owner Occupier loan @ 80%) were:
|1 Year Fixed||3.69%|
|2 Year Fixed||3.65%|
|3 Year Fixed||3.64%|
|4 Year Fixed||3.74%|
|5 Year Fixed||3.99%|
If you want your loan requirements reviewed, flick Tom a quick email firstname.lastname@example.org or call on 0476 111 000.