Investors should plan now<\/strong><\/h2>\nMs Mapusua said while a fixed-rate home loan may provide investors with certainty, there are still occasions when committing to this loan type may not be the best option.<\/p>\n
\u201cIf lenders predict an interest rate increase, they increase their fixed-rate loans above their variable rate in response,\u201d she said.<\/p>\n
\u201cFixed-rate loans have less flexibility and product offerings than their variable rate counterparts. For example, some banks will charge extra to have a redraw option.\u201d<\/p>\n
Furthermore, fixed-rate loans often have higher break fees, which could be costly to adjust once investors have already locked in their rates.<\/p>\n
\u201cIt is not always good to lock things up in unstable economic times, but it is essential to consider your options,\u201d Ms Mapusua said.<\/p>\n
\u201cUse this time to build confidence in your investment portfolio by staying informed, educating yourself about future interest rates, and creating a realistic budget.\u201d<\/p>\n
Mr Breuer shared similar sentiments but added that interest rates are often very difficult to predict given the external influences.<\/p>\n
\u201cThe RBA has estimated that it\u2019s cash rate will not increase for another two years or so, but that it may increase earlier if inflation and wages growth are too excessive,\u201d he said.<\/p>\n
\u201cMeanwhile, we have seen the Australian banks\u2019 funding costs are increasing, so this may result in out-of-cycle variable rate increases the same as fixed rates.\u201d
\n\u2014<\/p>\n
Photo by Joshua Mayo on Unsplash.<\/em><\/p>\n<\/p><\/div>\n
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