The Reserve Bank has pegged the interest rates at a historic low of 2.5%, and home owners are taking advantage of this by locking in their mortgage loans. Fixed rate loans have surged to 33% of total home loans, its highest level in more than 5 years.
There has been a drastic increase of borrowers considering fixed rate options, from 16.35% in January 2013, to 33.06% in December of the same year – around the same time the RBA met and kept the interest rates at its current low rate.
Fixed rate loans are a great option to pay your mortgage, making the repayment process stress free, as you have a clear figure on your monthly dues. Borrowers are also encouraged to weigh in on the long term benefits of this repayment scheme, as any extra repayments with fixed rate loans normally come at a fee, as compared to variable rate loans where any extra repayments are free. Consult a financial planner to verify what the perfect repayment scheme is for you.
Read more about this on the Herald Sun Website.