Borrowers urged to consider loans during interest rate hold

Borrowers are being advised to reassess their mortgages in light of predictions by many financial experts that the official interest rate is unlikely to change in the near future.

The call is from the peak body representing Australia’s finance brokers, which says borrowers should ensure their loan has not become unsuitable for their needs.

“One of the best things people can do is ensure the interest rate structure on their loan is suitable for their future,” said Finance Brokers Association of Australia (FBAA) executive director Peter White.

He said borrowers should consider their short to medium term plans in order to judge whether a fixed or variable rate loan is preferable.

“If they have no immediate plans to change their borrowing needs for renovations, extensions or the like for the next two to three years, fixing their interest rate for that period may be a good option with many fixed rates sitting at below four per cent,” he added.

“By doing that, as rates rise, borrowers will be in front.

“On the other hand, a part-fixed part-variable rate loan structure may be a good option if people want to hedge their bets on all fronts.

“The key is to wait for the best time to do it and that may be another six to ten months down the track.”

Mr White suggests with all the uncertainties in the home loan marketplace, borrowers should look to mortgage association professionals such as an FBAA member to guide them through the interest rate mire.