To fix or not to fix? It's a clever question to ask your broker!

October 17, 2014
Aurelio Tenaglia

To the uninitiated, economic changes that occur in the US or China may just seem like a story of little relevance from a land on the other side of the world. But realistically, the impact of change in the economic conditions of the US or China do in fact have a profound effect on interest rates here in our own backyard. These changes can affect the interest rate that is applied to your variable rate mortgage. Some people select a fixed rate option to shield themselves from rate rises over fixed terms.


Many Australian economists don’t expect the Reserve Bank of Australia (RBA) to lift rates soon, however there are others who are incorporating the consistency of the economic recovery in the US into their “not so sure when” judgement.


Strong US employment results appear to be underscoring a bustling economic recovery while a slowdown in China and dropping prices for coal and iron ore have seen the Australian dollar drop back to a value it last visited in 2010. A lower dollar generally boosts exports but also increases the price of imports.  The RBA has also recently noted it wants to take the “heat” out of the booming investment property market fuelling speculation that interest rates may rise sometime in 2015.


I have a number of clients who have contacted me of late, who while taking these economic factors into account have found comfort in a move of their home loan to a fixed interest rate option. Whether or not to fix your rate is determined by a number of economic and personal finance factors. Generally in times of uncertainty, the decision to fix is taken by many who prefer to be "risk adverse" - better the devil you know is their theme.

Different lenders offer different fixed rate options. The rise in new “fixed rate options” to hit the market is certainly giving many food for thought.


My recommendation to you is to allow me to explain all your options. Being well informed will allow you to make a timely decision that best suits your personal circumstances. Call me on 0438 258 888 or send me an email to


Posted in: Interest rates

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