How to avoid home loan switch fixed rate fluster

Locking in a fixed rate or switching home loans altogether is top of mind for Australian borrowers as lenders slash fixed interest rates and continue to bring out special product offers.


August 15, 2011

Locking in a fixed rate or switching home loans altogether is top of mind for Australian borrowers as lenders slash fixed interest rates and continue to bring out special product offers.

The average three-year fixed term interest rate (the most popular type) has not been this low since October 2009 and new home loan deals are being released every other week, according to Mortgage Choice, Australia's largest independently-owned mortgage broker.

Company spokesperson Kristy Sheppard said, “More than one third of our lender panel has reduced interest rates on some or all of their fixed term home loans in the past week, some more than once.”

“They are reacting to changes to their funding costs, subdued home loan demand and uncertain economic conditions by re-pricing fixed rate loans and continuing to bring out attractive loan offers in the hope of boosting the flow of customers walking through their doors.

“It's a terrific environment for mortgage brokers, whose expertise, vast knowledge of the market and relationships with a wide range of lenders pave the way to negotiating a better deal for borrowers. Borrowers are the overall winners in a landscape that provides more affordable home loan choices.

“The key message to confused mortgage holders considering switching loans and/or lenders is: the interest rate should not be the driving force in your decision. Also consider exit fees for the current mortgage and compare all other aspects of the new loan such as initial and recurring costs, ability to make extra repayments and redraw, flexibility, lender service and how long it will take to be approved.

“If choosing a fixed rate, investigate rate lock fees for securing today's offers and be aware of possible break costs if you decide to switch again during the fixed period. Also consider how you will feel if you lock in and then watch interest rates fall down the track.”

An increasing number of borrowers are weighing up their home loan options via online comparison calculators. In the first fortnight of August, comparison website HelpMeChoose.com.au saw a 32% increase in refinancing enquiries when compared to the average for July. 
 
“Online comparison sites are a great starting point for exploring loans, but nothing beats a thorough home loan health check. Working one-on-one with a mortgage broker who has a large lender panel will see you compare your product against hundreds of others. Even better, brokers provide guidance through the loan selection, application and settlement process and beyond,” said Ms Sheppard.

For on the move access to Mortgage Choice's loan calculators download the free Home Loan Helper iPhone app.

For home loan tips, trends, facts, data and other information, visit Facebook.com/MortgageChoiceor Twitter.com/MortgageChoice. Or, call 13 MORTGAGE.
 

For further information or to arrange an interview, please contact:

Belinda Williamson      
Mortgage Choice 
(02) 8907 0472 / 0407 416 124  
belinda.williamson@mortgagechoice.com.au
 


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