1300 Home Loan’s director John Kolenda has thrown his support behind fixed-rate interest loans, at a time when variables are winning over customers.
Kolenda said rates are at an all-time low at 5.74% for a fixed three-year term, which are 30 to 40 basis points less than the average discounted variable rate.
“We have been through many crises over the past 20 years, including the 1997 Asian crisis, the tech bust, 9/11 and the GFC, and only rarely have fixed rates been as low as this,” he said.
He did warn, however, there was a “narrow window” of opportunity for brokers to take advantage of fixed rate loans.
“Lenders are clearly pricing in further interest rate cuts due to global economic weakness. As fixed rates are forward-looking, any further reductions in the RBA
cash rate may not flow through to fixed rates.
“No-one can be confident of picking the exact bottom of the cycle but this is certainly not a bad time to look at fixing,” he said.
Variable interest rate loans have surged in popularity over the past three months, reaching a nine-month high in June, according to Mortgage Choice.