This week the Reserve Bank of Australia left the official cash rate for November unchanged at a record low level of 2.50 per cent.
The RBA has now held the cash rate at the all-time low of 2.50 per cent for the fifteenth month in a row and recent benign inflation readings has lead most economists to suggest that it will remain steady into 2015.
Interest rates can be a complicated subject, but it is worth getting to know a few of the associated basics to navigate the world of home loans.
Fixed interest rates are usually set at the time of your agreement and are not supposed to change throughout the life of your loan.
The advantage of a fixed rate is that you always know how much you will be paying, but the downside is if interest rates suddenly fall you will not be able to take advantage of the savings.
Variable interest rates work in the opposite way – the rates could fluctuate regularly based on economic factors and decisions made by the Reserve Bank of Australia, meaning you could be negatively impacted if the rate goes up but will benefit if it goes down.
There is also the possibility of having a part fixed, part variable interest loan or comparison rates.
We have seen a rise in the popularity of fixed rates amongst our clients. They like how a fixed rate helps them to plan their budget as they now know exactly how much they need to pay towards their mortgage for the fixed rate term.
The feeling of security and certainty is important for many people.
A chat with one of our finance brokers will help you discern between these different types of loans and make the best choice for your personal situation. Call Robyn on Chloe on 6173 6300 for an obligation free finance health check and to see if fixed rates could be beneficial to your financial situation.