Fixing rates is a dangerous game
The gap between variable and fixed rates is at historically high levels. Currently Commonwealth Bank and NAB are offering standard variable mortgage rates of 5.74 per cent. ANZ and Westpac have set their standard variable rates at 5.81 per cent.
Other lenders are offering variable rate mortgages with interest rates below five per cent. The Infochoice benchmark average of all lenders is 5.24 per cent. In contrast, five year fixed rate mortgages are offering average rates of 7.23 per cent, according to Infochoice.
“There is a big gap between variable and fixed rates so unless you want to pay a premium for certainty, you are almost always better off with a variable rate, even if rates are likely to head up,” says Infochoice’s CEO, Shaun Cornelius.
Cornelius says there are two reasons people take out fixed loans, for certainty or because they are betting that it will work out cheaper in the long run than a variable rate mortgage. “If you are fixing to try and beat the variable rate, that is a very dangerous game to play. Most people who play that game lose.”
Source: The Sunday Mail (Brisbane)