While in previous years Australian home buyers would go for variable interest rate home loans, now we are witnessing the opposite phenomenon, with locking in mortgage repayments becoming a more attractive proposition.
Young Australian first home buyers are setting their foot on the property market with greater confidence thanks to the low fixed interest rates that they are being offered on home loans, financial website Mozo reported.
There are fixed rates that are 0.5% lower than variable rates, so it’s crystal clear to everyone that fixing at 4.95% is a good idea, said John Symonds of Aussie home loans. It is first home buyers who are seeing low fixed rates as an attractive alternative to entering the market.
Fixed rate loans are gaining increasing popularity with young buyers as they can easily do the maths and shop around for a better deal, said L Janusz Hooker, deputy chair of LJ Hooker.
With fixed rates as low as 4.79% for one-year loans and 4.99% for three-year offers, home buyers have the opportunity to plan their monthly budgets ahead and treat their home loan as a regular bill without having to worry if interest rates will change in the future.
With interest rates having dropped by 1.75% since November 2011, many Australians would probably find far better deals in the current market than the original home loan agreements they may still be stuck with.