Short Answer: If it’s a suitable strategy for you, within the next 3 months.
Long Answer:
Historically sticking with the variable rate triumphs over fixing interest rates, just like picking a falling or rising stock on the stock market. You can never pick the exact timing of the market.
Fixing now or in 3 months won’t make too much difference. However, leave it for 12 months and you may lose an opportunity to purchase insurance at a good rate. Most commentators are predicting the fixed rates next year should be in the 7%pa or higher due to more optimism about the future. If it’s the right thing for you, where you have longer term debt or investments, then in the next 3 months may be your best opportunity.
Be Careful – Real Life Examples:
a) Client sold home, Paid out home loan and paid $16,000 break cost in August 2008
$450,000 Home Loan, 5 years fixed at 7.45%pa, 3 years remaining
b) Client was quoted in March 2009: $62,000 break cost
$500,000 Home Loan, 5 years fixed at 7.8%pa, 4.2 years remaining
It’s important to look at your individual situation and assess whether fixed rate loans are a suitable rate-hedge strategy. Basically, if you don’t change property and home loans from year to year, or you have long term investments & loans, it may be the best time to consider changing to a fixed rate loan.
To find out more about fixing your interest rate, call our Plan Assist Mortgage Team on 02 9449 2333.
