Gap narrows between product types
By
Andrea Cornish
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23/06/2010 8:00:00 AM
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Fixed and standard variable rate products are almost sitting at parity, following rises in the official cash rate.
The gap between the two types of products has narrowed to within 16 points on average, which equates to about $26 on a $250,000.
“Borrowers could see this as an opportunity to reduce the risk of fixing but they need to be aware that fixing a home loan is a long-term decision and very much a gamble, so it really does depend on your own individual circumstances,” said Mitchell Watson, financial analyst for Canstar Cannex.
“For instance, we saw people rush to fix in October 2008 when they expected rates to soar. Instead the reverse happened and they ended up worse off than those on variable loans.”
Borrowers who took out a three-year fixed loan in October 2008 will be out $9,600 in monthly payments, while those who fixed for the same period in April 2009 are ahead by $1,400.
As reported in Broker News, BankWest dropped rates on its two most popular fixed rates products yesterday.
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