Should I lock into a fixed rate on my home loan?

As a mortgage broker, I'm always looking out for the right deal for my clients and the current fixed rates represent a great opportunity for security at a low interest rate.

Homeowners contemplating a fixed rate generally have one major hesitation to overcome: the fear of missing out if interest rates fall further.

But I think it's going to be very difficult for variable rates to average what you can lock your rate into right now on a two-year term.

At present, there are advertised fixed rates at 4.99% for two years, which is over a full percentage point below the major banks' standard variable rates, such as CBA's 6.40%

All indications point to rates bottoming out, with potentially another 25 to 50 basis points cut off variable rates - historically, fixed rates bottom out six months before the bottom of the variable rate cycle, which is what all indicators suggest now.

While it can be argued that advertised standard variable rates can be discounted depending on the strength of a borrower's application, most lenders will not discount more than 100 basis points for the most qualified customers.

It will be hard for most variable products to average at a rate less than 5% over the next two years.

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