Borrowers Should Take Advantage Of Record Low Interest Rates

Post by Sharat on April 7, 2009 · Under Australian Economy, banking, home loans, interest rates, mortgages · 2 Comments 

Individuals who are looking to take advantage of record low interest rates and dip their feet into the property market should now be considering fixed rate home loans a leading mortgage broker says.

Mortgage broker, The Loan Market Group, reckons that fixed rates have already begun to climb despite the fact that the Reserve Bank of Australia (RBA) is expected to continue easing cash interest rates.

Banks or mortgage lenders tend to set fixed rate mortgages based on term wholesale market funding rates, and therefore fixed rate mortgages are less sensitive to changes in interest rates. Standard variable rates are much more dependent on official interest rate decisions,

“Many consumers are unaware that the variable rates move differently to fixed rates and by the time variable rates have bottomed they have missed the best opportunity to fix. If you are able to secure a great fixed rate in the high four per cent or low five per cent range for a three-to-five year period then you should seriously look at it.”

The cash rate was cut to 3.25 per cent in February, the lowest level in 45 years.


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Comments

2 Responses to “Borrowers Should Take Advantage Of Record Low Interest Rates”

  1. Brenton Eccles on April 7th, 2009 5:54 pm

    And what are these borrowers who take advantage of this going to do when the rates start rising again?
    We are facing an asbolute systemic failure of the monetary system here, not just some financial mismanagement crisis or something.
    Please, everyone, educate yourselves about what monetary economics is all about (visit the website I’ve linked to).

  2. Sharat on April 8th, 2009 2:14 pm

    Its a fixed rate mortgage, rates are at near all time lows, the idea of fixing them now is they are either bottoming or set to rise, so it would be a good idea to lock in now because it would be cheaper to do so sooner rather than later.

    Fixed rate mortgages and variable rate mortgages are funded differently and that is why there is a differential.

    With the former you lock in rates at lows, and with the latter, as rates climb which they probably will by the end of the year, so does the mortgage interest rate. Hence the piece

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