Fixed rate loans allow borrowers to accurately compute their loan repayments without having to mind the fluctuations in interest rates during the fixed rate term of the loan. More and more borrowers are opting for this type of payment scheme despite news of the 4 major banks increasing their fixed term mortgage rates.
Over the month, fixed rates are accounted for 27.38% of all home loans, slightly higher than the previous month which finished at 26.8%. Mortgage firms are predicting that fixed rate loans are set to increase in the coming months.
Although a good payment scheme, borrowers should be aware of the pros and cons of both variable and fixed rate loans before opting for either one. Fixed rate loans cannot take advantage of the current low interest rates. This can equate to a lot of savings for the borrower. On the other hand fixed rates give borrowers the peace of mind of not having to worry about any changes on their payments.
Read more about this on the Property Observer website.