With major lenders currently raising their interest rates, the peak body representing Australia’s finance brokers is urging mortgage holders to consider the option of changing from variable to a fixed rate.
Peter White, Executive Director of the Finance Brokers Association of Australia (FBAA) says it is not surprising the big banks are raising interest rates independently of the Reserve Bank keeping official rates at an all-time low.
“We have been saying for all of 2016 that it was inevitable the banks will increase interest rates because their profit margins are being narrowed. The cost unfortunately has to be offset by the borrower.
“For the moment, bank interest rates remain attractive, so fixing your rate can be economical but it depends on the borrower’s individual circumstances,” he said.
Mr White said some fixed rates are cheaper than variable rates, and there are options to fix only a portion of the repayment.
“Consumers should be able to reassess their mortgage and be released from fixed interest rates at times of rising rates however many banks still attempt to charge these fees.”
His advice to borrowers is to consult their FBAA finance broker if they are unsure about whether their situation warrants a re-evaluation of their mortgage.
“Brokers are experts and provide the advice most suitable to the needs of a mortgage holder.”