Bankwest Rate Cut: Mortgage RatesAll the major five banks in Australia lowered home loan interest rates this week, after the Reserve Bank of Australia (RBA) cut official rates.
Bankwest reduced theinterest rate on their standard variable rate by 60 basis points following the official cut of 75 basis points from the Reserve Bank of Australia on 5 November. All other major banks also reduced their standard variable rates by between 58 and 65 basis points, and many non-bank lenders have also reduced rates.
If rates are falling, should I go for a variable rate loan?
This question is a common one from potential home owners and borrowers looking to refinance. The decision over whether to fix your interest rate, or choose a variable rate home loan is a personal choice, depending on your own circumstances and financial goals. Your mortgage broker is well equipped to advise you and offers you valuable industry knowledge. Basically, if interest rates go up, and you have a variable rate, you can end up paying a lot more each month for your home loan, just in interest. However, if you have fixed the rate, you will keep on paying the same amount regardless of how much the rates rise. But, the flip side is that if rates go down, you may then find yourself paying a higher rate than those borrowers with a variable rate.
Look long term and consider you own lifestyle. When you take out a mortgage for your property, consider whether you could afford a slight increase to your repayments should interest rates rise. If you can, then you may want to take the risk and wait for the rates to fall. If however, you believe that rates are rising and not going to fall in the next year or so, then fixing your rate now may be a better option.
Split the risk!
You can choose to split your mortgage, securing say, 60 per cent on a fixed rate and then 40 per cent stays variable. This gives you more flexibility to use interest rate cycles to your advantage, while still protecting part of your loan.
Don't waste time fretting over what to do. Talk to us and let us help you see a clear way forward. You can call and speak to a local mortgage broker on 1300 787 665.
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