Consumers taking out fixed home loans
Thursday January 17, 2008
Figures released by the Bureau of Statistics revealed that one in four new home borrowers took out a fixed interest home loan in November.
These figures are sure to climb in the coming months after Treasurer Wayne Swan said that Treasury had advised him that inflation would remain above the Reserve Bank's 2% to 3% comfort band for the next 18 months
Fixed interest rate home loans are usually taken out for a period of between 1 to 5 years. While you can make a significant saving over this period if interest rates continue to rise, you can also make a significant loss if you lock in your fixed term for a long period of time and the home loan interest rates drop. You can't just cancel your fixed term interest rate home loan without a substantial penalty.
One popular home loan in uncertain times is a split home loan where you lock in a portion of your home loan at a fixed rate and a portion remains at the variable home loan rate.
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