With predicted rate rises from the RBA expected throughout the year and probably into 2023, many clients we’re working with ask the question….should I be fixing all or part of my loan?
Well the simple answer is that it completely depends on the person’s needs and appetite for risk. Everyone’s situation is uniquely different. For some people they will err on the side of caution and wish to fix a portion of the loan (referred to as a ‘split’ loan) so as that they understand that for the defined ‘fixed’ period they know what their repayments will be…even if the fixed rate is over 5%. In some ways it allows them to sleep better at night!
However, for others, it’s the knowledge that variable rates for the meantime have only moved marginally compared to fixed rates. For there to be a monetary benefit to fixing the loan the variable rate has to increase by 300 to 400 basis points ( which is 3 to 4 %) in the next couple of years to justify fixing the rate.
At the end of the day, as your broker we will be able to guide you through these issues and help you work out what will work best for you.