Over an interest rates cycle, variable rates tend to be cheaper. The downside is that they can vary considerably over the years.
Fixed interest rates give you certainty. You know what your repayments will be.
However, there is generally an extra cost for this type of ‘insurance’.
It is not uncommon for the RBA to start lowering rates soon after every man and his dog start locking in to fixed rates. The problem then is you’re locked in at a silly rate for years.
So, when is the “right” time for fixed rates? The answer, according to the experts, is once rates have been falling for a while. That’s pretty much where interest rates are right now – according to Bruce Brammall (author of Debt Man Walking).
As always, we recommend you obtain professional advice before making any changes to your financial situation. Contact 5 Financial for further information.