The demand for fixed rate home loans has been on a decline in the past few months. In March, only 20 percent, or one in five borrowers opted to fix their home loans. However, there seems to be a lot of noise about a rate hike, which could send home borrowers scurrying to fix their mortgage so that they can enjoy the lower rates for a longer period.

Is this the time to fix your mortgage?

But, is it really the right time to fix your home loan?

According to experts, a rate hike by the central bank is imminent. In fact, Reserve Bank Governor Philip Lowe has warned people that the “next move in the cash rate will be up, not down.” However, it won’t happen for a while and “might come as a shock to some people.”

But, what will happen sooner is out-of-turn rate hikes by several banks in Australia as the cost of overseas funding is increasing. And while such rate hikes could invite scrutiny, the high cost of funding might pressurise the banks to hike the rates, anyway.

But, where does this leave you, an average Australian homebuyer?

It is amply clear that your mortgage would get expensive in the time to come. But, could fixing the rate on your mortgage be the key to saving money. Let’s see. Fixed rates are known to increase whenever there is speculation of a variable rate hike. Thus, it is not surprising that 2018 has seen significantly more hikes, than cuts, on owner-occupied mortgages across all fixed terms. So, this means that the low fixed rates currently available could be a memory soon. Consequently, borrowers looking for certainty in repayments might consider this to be an opportune time to fix their home loan.

In case you are thinking of fixing your home loan, you can find fixed rates starting as low as 3.58% p.a. on HashChing (compare home loan deals). But, before you fix your rate, here’s some advice from the experts:

It is advisable to set your rate for not more than three years at a time as interest rate cycles can reverse during this period, and you might find yourself at sea after a few years if the variable rates start going down again. Besides, keep in mind that prepaying a fixed rate mortgage could be expensive. Thus, it might be better to opt for a shorter term of three years, as you never know which way the interest rates might swing in the future.

Another good idea might be to split your mortgage into fixed and variable components. By fixing a part of your home loan, you get the benefit of fixed repayments to an extent and continue to enjoy the flexibility offered by a variable rate loan. Besides, splitting your loan could help you repay your debt faster because you can keep making additional repayments on the variable part of the loan, which is not always possible with fixed-rate loans.

Get the most out of your home loan

Currently, most banks are offering a variable rate of 3.70 percent (or even lesser), making it the new benchmark for home borrowers in the mortgage industry. If you happen to be paying above this new standard, it is likely you are paying too much interest on your home loan. By simply taking out a couple of hours and comparing home loan deals online, you can save thousands of dollars that can be used to pay your mortgage faster or meet other life goals.

Whether you are looking for a fixed rate or a variable rate home loan, you can view and compare hundreds of competitive home loan deals online from over 60 lenders across Australia. All the home loan deals featured on HashChing are broker pre-negotiated, which means, you could potentially score a rate almost one percent lesser than lender advertised rates published elsewhere. In case you have any home loan related queries, get in touch with our verified mortgage brokers online to receive a quick resolution to your queries in a timely and transparent manner.

HashChing is Australia’s first borrower-friendly online mortgage marketplace that brings homebuyers closer to their dream of owning a home through more choice and savings.


By Vidhu Bajaj,
HashChing Content Writer



HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.

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