Economy

A few weeks ago the Commonwealth and Westpac banks cut their fixed rate home loans across the board and most other financial institutions are likely to follow suit.

We’re getting lots of questions on whether now is the time to fix. Frankly no-one really knows the answer because every individual borrower is different and forecasting interest rate movements is fraught with danger.

The general consensus is that the Reserve Bank will cut official interest rates by one per cent over the next year depending on how the European crisis pans out.

When it comes to revisiting your home loan it should be done according to how you are currently handling it. Regularly stress test your mortgage to determine whether you need to make a change or can continue with the current deal.

Remember you can be in a mortgage for a long time and through a lot of rate cycles, both up and down.

A few things to consider are that when fixing loan, or a part of it… you are locked in at that rate no matter where the banks’ variable rates go, and usually you don’t have the option to pay it off early.  Early repayment attracts hefty exit fees.