Seek advice if tempted to fix

Leading mortgage broker Loan Market is recommending consumers seek advice if they are considering fixed rate home loan products with many analysts predicting the end of the downward interest rate cycle.

Loan Market director Mark De Martino said that nearly one out of every two home loan enquiries at Loan Market in October expressed interest in fixing their home loan. The popularity of the products are booming because of warning signs that rates are heading back up.

“Many homeowners and buyers mistakenly think the best time to fix your interest rate is just before they head up, when in reality the best time to fix your interest rate depends more on your personal circumstances than what the market is doing,” Mr De Martino said.

Mr De Martino suggested that borrowers needed to consider their lifestyles, financial goals and property plans before picking the most suitable type of rate. Then they can consider when and if they should act sooner in anticipation of rates dropping.

“Borrowers need to ensure they were locking into a fixed rate for the right reasons, some of which included certainty of repayment and peace of mind rather than as a speculative play on where rates are going to move.”

“A home loan is something that a borrower will carry with them for decades and they will likely see several interest rate cycles. Fixing into a historically low interest rate right now for the first two or three years is attractive but that strategy needs to match with the personal goals of the borrower,” he said.

Mr De Martino said that nearly 50 per cent of all homeowners were now using a mortgage broker to help them figure out if a fixed interest rate would match their personal situation and financial goals.

“Mortgage brokers are the best advocates for responsible borrowing. They’ll make sure the client is put into a home loan that will still allow them to live the lifestyle of their choosing.”