Mortgage brokers in Baldivis, Kwinana or anywhere in the Perth area are always asked one question by people seeking a home loan: “Should I get a variable rate or a fixed rate mortgage?” Recently, an Australian survey conducted by Canstar concluded that a variable rate mortgage produces better results.
The survey compared variable rate loans over 20 years with the average fixed rate loan. People with fixed rates did better for 112 months, but those with variable rates did better for 123 months. 15% of the mortgages in the survey were fixed at rates research manager Mitchell Watson referred to as “very competitive.” The other 85% were written at variable rates.
Mr Watson recommends fixed rates for people who want stability and don’t plan on selling soon. However, he mentioned that people with fixed rates can be the most affected during tough economic times. He also pointed out that the Reserve Bank of Australia (RBA) cash interest rate has dropped from 4.75% in November 2011 to its current rate of 2.25%.
Mr Watson also mentioned that many people like to “hedge their bets” by opting for a “split loan” with a portion fixed and a portion variable.
What it Means to You
There are a lot of variables in this survey. At this point, we are in record low interest rates, which is uncharted waters. While the survey has value, Mr Watson acknowledged that we are now in a unique time. We recommend talking to a mortgage broker about your individual situation and determining what is right for your individual needs.
Call Smartline Rockingham
Whether you want a variable rate mortgage or a fixed rate mortgage, Smartline Rockingham can help you find the financing that is right for you. We have access to 28 different lenders offering a total of more than 300 credit products. To find out why we are the most trusted mortgage brokers in Rockingham, call us today: (08) 9527 1800.