August 03, 2015
With interest rates sitting at record lows, it's no surprise that we're often asked whether it's too late to lock into a fixed rate. There are some fixed rates currently available below 4%pa, but don't just focus on the rate. It's important to consider if fixing your loan, or a portion of your loan is right for you.
Let's see what you need to weigh up. First up, no one can accurately predict how rates will move. Yes, variable rates could go lower but with rates already at historic lows, there is also plenty of scope for rates to climb.
If rising rates would see you struggle with loan repayments, locking into a fixed rate can offer valuable peace of mind and protection from rate hikes for the fixed term.
That said, if you are looking for flexible features like redraw or the ability to make unlimited extra payments, fixing may not be the best option. Sure, fixed rate loans have become more flexible in recent years and some do allow additional repayments, though these are typically capped by annual limits, which may not suit your needs.
Variable loans are still generally superior when it comes to flexible features. What many people don't realise is that plenty of lenders will let you split your loan between fixed and variable rates, and this can provide the best of both worlds. In today's uncertain interest rate environment, it makes sense to get some expert advice.