Australian Insurance, Finance, Superanuation & Investment Resources

Income Insurance Calculator

Gross Income: How much cover
can I buy?

Need help finding the best home loan?

Get a free home loan eligibility assessment and compare loan offers.
Loan Amount:$ State: Postcode:

Time to fix your mortgage?

Time to fix your mortgage?

home refinance information articles
GOOD on Ian Macfarlane. The Reserve Bank chief says interest rates might rise, but not as far as he can see. Or put it this way: he'd expect it over time, not that he knows, or at least that's the present intention. Unless things change.

I'm glad that clears that up.

Not that it matters what rates do because, thanks to a quirk in the money market, you're better off fixing your mortgage anyway.

Or if you're saving, you're better off investing your money short as short can be.

Yes, even if rates drop, which seems pretty unlikely, it would still pay you to fix.

In fact, if you haven't fixed at least some of your mortgage you're shooting yourself in the foot - or your best friend if you're Dick Cheney.

The bank standard variable rate is 7.32 per cent, but the cheapest three-year fixed rate is 6.47 per cent, from the NSW Teachers Credit Union.

On the average-sized mortgage of $250,000, that's an annual saving of just over $2100.

That would cover exit costs from a variable loan - unless you're locked into a honeymoon - the entry cost of the new loan and still leave something on the table.

By the second year you'd be laughing. You can get five-year fixed rates for 6.64 per cent which might bring more peace of mind. If you want to keep your options open,try a smorgasbord of two-, three- and five-year rates. Even if rates were to drop, it would be in 0.25 per cent doses, spread over a long period.

It would take three rate cuts just to get down to today's lowest fixed rates, a prediction that no economist as far as I know is making.

And certainly not our friend from the Reserve.

No wonder, when you see what it would take to get a cut of that magnitude. There'd have to be a severe recession, which would be hard to come by when commodity prices are at a record.

Or the quirk in the money market, which pays more for short- than long-term money, would have to disappear.

Since this is more likely to happen with longer rates rising, rather than shorter rates falling, considering the underlying weakness of the dollar, not much chance there either.

Mind you, it's savers who have to be careful. They can get up to 6 per cent from a bank, which doesn't sound a lot but at least it's only one-year money.

More one-night-stand money, come to that. Commit for any longer and you'll be offered less, strange as it seems.

Thankfully, inflation is just under 3 per cent so even after tax on the highest marginal rate, the return on overnight money is a smidgin above the inflation rate. It won't make you rich, but at least you're preserving your capital until something better comes along.

And it will. One day. Maybe.

Source: The Sun-Herald.

Reader Comments

No comments yet. Be the first!

Add Your Comment

* Required fields
Captcha Image

Disclaimer: The information contained above has been provided as a general service. Any references to specific financial, legal, accounting, or taxation issues are done so in the context of general information and should not be relied upon as fact or construed as advice by the us in any of these areas. You should consult a relevant financial, legal, tax or accounting professional to assist in your particular circumstance.

Personal Loans Fast!

Simple online application, fast easy approvals and great service.

One-stop loan shop for cars, boats, business, trucks and unsecured personal loans.

Business Loans Specialist

Fast, free online loan assessment for business & commercial finance.

Home Loans Australia

Look now further for low rates and fast, free online approval process.

Car Loans: Low Rates

Independent source for free online finance comparisons. Check it out.

Personal Loans Australia

Apply online for unsecured finance for any worthwhile purpose.

Financial Calculators

Download these 16 fabulous calculators and make your own financial decisions fast & easy!

Compare Home Loans

Shop multiple lenders for best offers. Free online eligibility assessment.

Car Loans: Fast & Easy

Australia's leading source for low rate car loans irrespective of credit history. Apply free.

Related Articles

Getting a home loan with bad credit

It is true that a foreclosure or bankrupty on your credit file can cause you problems obtaining credit for well into the future - but that doesn't necessarily make it impossible to get a home loan. read more

Home Loans: Choosing a mortgage broker

There is little doubt that a engaging good mortgage broker is your best ticket to finding the right home loan - but how do you choose a good mortgage broker? read more

Home Loans: Finding the one that fits

Finding the best home loan to suit your specific requirements and circumstances can be like finding a needle in a haystack. But, with a bit of guidance you just might find a mortgage loan that's a perfect... read more

Time to fix your mortgage?

When home loan mortgage interest rates are low, it may be a good time to consider fixing your loan. Here are some ideas to help you decide whether now is the time. read more

Business Loans: Managing interest rate risks

Here are thoughts for business wanting to enjoy the security of prevailing low interest rates without the need to commit too long term. read more

... more articles

Recent News

Timely help for Australians in crisis

Finance News: 29 Jan 2013. Whilst many people around the country are in the process of rebuilding their properties and their lives in the wake of natural disasters, Financial Services Online is pleased... read more

Small loans for Australian small business

Finance News: 27 Apr 2013. Aussie small business, including start-up businesses can now access small loan finance for amounts up to $10,000 with minimal asset backing and regardless of credit history. read more

... more news

  • You can reach us by mail at
  • PO BOX 1183
  • QLD
  • 4221
  • or CLICK HERE for our contact form
financial services online
Important: Financial Services Online is a referral service. We provide general information only and we do not offer financial advice. We refer all insurance, finance and other enquiries that are initialted on this and our associated websites to specialist advisers who are licensed in their respective fields. You should always seek professional advice before making important financial decisions.