Whether you fix the interest rate on your home loan now or not depends on your goals, circumstances, and risk profile. 

Probably the best time to get a fixed rate was about 5-6 months ago as fixed rates are now around 2.39% for two years up from about 1.8%. Alternatively, it's still possible to find variable rates as low as 1.94%. 

The impact of the Reserve Bank

Whether you fix your home loan or not is also an extremely timely question, particularly with some commentators predicting as many as four rapid-fire official cash rate increases when the Reserve Bank decides to move. Assuming rates go up 0.25% each time, a principal and interest loan with a rate of 1.99% could jump to at least 2.99%. This increase would add $400 a week in mortgage repayments on a $600,000 balance with a 30-year term. 

However, the Central Bank remains cautious about rate increases as inflationary pressures aren't necessarily demand-driven but rather are caused by a lack of supply. For example, the hospitality industry is running on empty because there is a shortage of workers for hotels, restaurants, and cafes. Of course, the reopening of international borders might address headcount shortages for the hospitality and services sectors, while more tourists will mean more demand for café latte, hotel rooms and smashed avo. However, it's a case of 'wait and see' for the RBA for now. That said if you can find a respectable fixed rate now, then grabbing it would be a smart move. 

Nevertheless, choosing between a fixed rate, variable rate or a mix of variable and fixed, known as a 'split loan', is always case by case. For example, if someone is borrowing 95% of the property's value, are debt averse or are pushing their borrowing capacity to limit, then a fixed rate might be the best option – or at least a split rate with much of the loan fixed. 

Then again, suppose the borrower plans to make significant repayments and has excellent employment prospects. In this case, an Our Broker specialist might tailor a split loan towards a more substantial portion of the loan being a variable rate – say 70% variable with the rest of the mortgage fixed. 

Whether to fix your mortgage or not is always a 'horses for courses' decision, which a financial specialist from Our Broker is available to walk you through. Call Our Broker today to learn more about the most suitable loan structure for your circumstances on 1800 913 677.