The 3 year fixed rates vary a lot between the major four banks. Different from variable rates, the banks change fixed rates on a nearly weekly basis. This means banks can adjust the rates and to suit themselves without many people noticing.
Some Lenders are Better than Others
The lenders aim to adjust their 3 year fixed rates so that they will earn over the time of your loan. They have to predict future rate increases or rate cuts and, fortunately for you, each lender has different opinions.
This means that one bank may offer a lower fixed rate because they believe rates will go down while another may have increased their rates estimating that rates will be higher for the next 3 years.
So if you want better rates and great savings then you need to shop around.
Fixing Your Rate is Like a Bet
Fixing your rate is like betting against the bank. The bank is predicting rates to go one way and you are accepting their estimation and fixing your rate in order to defend yourself from the increases in the cash rate.
You don’t want to fix your rate for a longer term during times of market panic. At the first sign of bad economic news, banks will generally raise their fixed rates because they want to capitalize on the market hysteria.
During times when the market is stable, the 3-year rates are generally lower. This is the best time to lock in your rate.
What will happen after the fixed rate period ends?
At the end of 3 years your fixed rate expires and your loan reverts to the standard variable interest rate. Typically, you will receive a letter from your bank a month before the expiration of your fixed rate including an offer for you to re-fix your rate for another 3 years.
You should always contact you broker to check if the rate you have been offered is competitive before accepting the offer.
If you chose not to re-lock the rate, the bank will generally give you the Bank Standard Variable rate (BSV). This may not be good news for you.
You should contact your mortgage broker and from there they can negotiate with your lender and secure you a discounted rate below the BSV.
Is a 3 year term the right choice for me?
The shortest time you should fix a loan for is usually 3 years. There is not much benefit of fixing your loan for 1 or 2 years.
A common reason that people choose a 3 year fixed rate over other terms is because they anticipate the financial markets to be unstable in the short term.
How do you apply for a 3 year fixed rate loan?
CALL US - 1300 55 10 45
You can contact us on 1300 55 10 45, or enquire online, one of our specialists will get back to you to talk about your options.
You should seek pre approval before entering into a 3 Year Fixed Rate Home Loan arrangement. The reason is simple, building is a complex excerise requiring good co ordination and technical skills.
Lenders are aware of the complexity builders face, and the possibility of costs over runs. This comes primarily from in-experience with managing this type of project. Hence most lenders are not generous when it comes to lending at high LVR’s on a 3 Year Fixed Rate Home Loan.
Our mortgage broking is second to none. Don’t waste your time and money running around from bank to bank, sifting through ambiguous loan offers only to find they don’t work. Take advantage of our expertise and let us find the right loan or finance to suit YOUR needs.