Should You Fix Your Home Loan Now?

“It’s not always about which direction you’re doing best, but it’s about peace of mind. There are other times when the fixed rate is a bit higher and households still choose to fix because they want to go to bed at night because they want to know what they can pay back.

According to Barrenjoey’s chief economist, Jo Masters, with the last rate hike in November 2010 and huge adoption of fixed rates in recent years, there will be a large cohort of homeowners facing higher repayments.

“Thirty-five percent of outstanding mortgages are fixed mortgages. Before the pandemic, it was 20%,” Ms. Masters said, adding that first-time home buyers were the most likely to lock in rates because they are heavily in debt.

For James Algar, mortgage broker and principal at Mortgage Choice Dee Why, the majority of buyers and refinancers who came to his office were setting the rates.

“If you’re riding on a variable rate, your days of savings each day are numbered,” Mr. Algar said.

“It’s rare for financial analysts to all agree on the same thing, but all the commentators say rates are going up – they just can’t agree on when that will happen.”

Meanwhile, other homeowners are hedging their bets that rates will rise sooner or later by locking in part of their loan, according to Will Unkles, mortgage broker and director of Forty40.

“Some people are playing the long game and fixing their loan in hopes of saving money in the long run or once rates go up,” Unkles said.

“Then you also have people who are reluctant to increase their monthly repayments now. A cozy place makes a 50-50 split.


“That way you have the exposure of a cheaper variable while ensuring that the fixed component of your loan can protect you against future rate hikes.”

With the average fixed rate rising above the average variable rate, many banks had already priced in expected rate hikes, Unkles said.