To fix or not to fix? It's a question that could save you hundreds of dollars every year. We all know property prices in some parts of Australia have seen a slump - but whether or not interest rates will also decrease is anyone's guess. RateCity says those wondering if they should fix their rates or not now have a great chance to do so, because three-year fixed interest rate home loans are at their lowest levels since 2009.
"RateCity analysed more than 100 lenders in its extensive home loans database and found that average three-year fixed rates are at their lowest since October 2009, while two-year fixed rates have been falling since July 2009," it says.
"RateCity also found that the average one, two and three-year fixed home loan rates have fallen over the course of 2011."
The average three-year fixed rate is currently 7.38 per cent, which is just eight basis points above the current average standard variable rate of 7.3 per cent.
"Even more significantly, 36 lenders now offer three-year fixed rates below that variable average," RateCity says.
Chief executive officer Damian Smith says lenders are simply competing harder and the general consensus is that interest rates will rise in the coming months.
"The ban on excessive early fees doesn't include break costs or fixed rate home loans, so it's a better deal for lenders to increase their customer base for fixed loans while borrowers could save on interest," Smith says.
"For instance, we've found three-year fixed rates as low as 7.14 per cent, which is better than most standard variable rates currently on offer.
"The current average standard variable rate is 7.3 per cent so if variable rates rise by 50 basis points in six months' time, you could potentially save $2500 on a $300,000 mortgage in three years."
Average standard variable rates vs average three-year fixed rates
