5 Year Fixed Rate Home Loan

Which bank has the lowest 5 year fixed rate?

Unfortunately, you can’t simply browse the internet to find the lowest fixed rate prices.  This is because the best rates have to be negotiated with the lenders.

The best way to get a deal is to use a mortgage broker to help you find the lowest rate for your 5 year fixed home loan.

There is no set fixed rate

Variable rates are very similar between most major but fixed rates vary for each of the banks. Fixed rates change often and are controlled by each bank.

This means that banks can play games with the pricing of their loans. Each bank has different opinions of what the future interest rates and this affects the pricing and therefore the major banks offer different 5 year fixed rates.

Why should you fix you loan for 5 years?

The decision to fix your loan for 5 years is difficult. There is no accurate way to predict how interest rates will behave. You can only take an educated guess as to the right time to lock in your repayments.

If you are sure that rates are going up in the medium term then you should fix your loan for 5 years.  You can also fix your loan if there is a high chance that an unexpected rise in repayments would cause you financial hardship.

When should you leave your loan on variable rates?

It is a bad idea to lock your rate during times of economic instability. The banks generally increase their rates to cash in on the market panic!

The best time to fix your loan is when the market is stable and you predict that there will soon be bad economic news. Although in practice, it is hard to know when the bad economic times are coming. The bottom line is, fix your loan when the market is stable in order to protect yourself when the market turns bad.

You can fix your rate in times of high market instability but this should only be considered as ‘damage control’.

Who shouldn’t fix their rate for 5 years?

A 5 year fixed rate is not perfect for everyone and it would be unsuitable for you if plan on making large extra repayments on your loan, you might sell your property during this time or you want a flexible loan with features such as 100% offset facility or a line of credit.

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