In contrast, the most borrowers with this loan size could have saved by fixing was less than $9000.
Michelle Hutchison, spokesperson for RateCity, says the study shows the ‘vulnerability’ borrowers face when locking in a fixed rate home loan.
"As the RateCity study shows, variable rates were 0.29 percentage points lower on average than three-year fixed rates over the past 20 years. Borrowers have to be particularly savvy and time it right to save money by fixing your mortgage, as it's more likely that you will lose out by fixing. Borrowers need to be careful and only fix if you are confident of your timing or feel you really need to avoid rising rates.”
Hutchison says borrowers also need to consider the range of interest rates available.
“Whether you're comparing variable or fixed rates, there is a big difference between what lenders offer…For instance, the difference between the lowest and highest variable rates in RateCity's database (excluding introductory loans) is almost 2 percentage points. This could mean a difference of $369 per month or over $4000 every year for a $300,000 home loan with a 30-year term."