With future rate moves uncertain, fixing your mortgage rate now may pay off in the long run, however ensure you do some research first. From the beginning of this year, over 20 mortgage lenders have increased their home loan rates. Some of these lenders have increased only their investments loan interest rates and others have increased the rates across their entire suite of home loan products.
In Australia, the recent spate of rate rises is merely the start of things to come considering the increasing wholesale funding costs and new prudential rules. In light of this, we may see many lenders changing their product pricing out of cycle with the Reserve Bank of Australia (RBA). From RBA perspective, there are hopes that it will cut the official cash rate probably once before the year ends.
And from the reviews of the three, six, and nine forward rates, it can be seen that the domestic market has already factored yet another a rate cut. Besides, the US Federal Reserve is now talking about feathering the throttle despite lifting the cash rate in December 2015. This was the first time in seven years.
The US Federal Reserve released a statement saying that the global economic and developments continue to pose high risks. This has made all the future rate increases to be firmly put on the backburner. These factors imply there is room for the RBA to change its stance on monetary policy. The high level of uncertainty surrounding the future of our interest rates is likely to influence many borrowers to fix their mortgage rate.
According to statistics from mortgage choice data, about 23% of all loans written are at least part fixed. This percentage is growing all the time. Although, fixed rates can really help borrowers avoid future rate hikes, some borrowers never fix their mortgage to beat the risks of rising rates. Suitability rather than pricing should entirely drive the choice of product. And if you are among those worried about rising interests’ market research is king. You should also consult with experts and professional to see what other product options are available.