Ask Paul: Is now a good time to fix my interest rate?
Is now a good time to consider fixing interest rates? My preference has always been a variable rate, but it appears the Reserve Bank doesn't have much room or appetite to move lower.
I am currently on a variable rate for all my three property mortgages; but it appears I can save a further 0.55% by fixing one or more of the loans for the next one to three years.
I was then hoping to place the interest I saved into super via salary sacrifice (up to the threshold).
Considering I have a good-paying "secure" job, is this a wise choice? - Chris
Chris, I have argued against fixing home loan rates for nearly 40 years. The uncertainty has been all too hard. But you make a very important point. The Reserve Bank is clearly not in favour of negative rates of interest, so how much lower can they go?
Frankly, in this climate I suspect anything can happen, so my inclination would be to get the lowest-rate variable home loan I could and pay it off via an offset account as fast as possible.
With some trepidation, though, I do see the value in saving another 0.55% with a fixed-rate loan. The question is, if the world fails to recover in the next year or so, will rates go even lower?
With fixed-interest loans sneaking under 2%, it is hard to see how you could seriously disadvantage yourself, but maybe a bit of a fence sit and doing half fixed and half variable is as good a guess as any!