To Fix or go Variable? How they are priced may help you decide
A Fixed mortgage interest rate is determined by various factors and is more re-active to market conditions then a Variable interest rate which is determined generally by both the Reserve Bank of Australia and the lender.
The various factors include:
Market conditions – lenders consider the prevailing interest rates in the broader market including the US and European markets, government bond yields, and local & international Central Bank benchmark interest rates.
Risk Assessment – lenders assess the risk associated with lending to individual borrowers based on credit profiling, employment history, and debt to income ratios.
Term of the loan – Generally longer-term fixed rate mortgages may have slightly higher rates compared to shorter term options.
Loan amount and loan to value ratios – Higher loan amounts and loan value ratios may result in higher rates compared to shorter term options due to their higher risk exposure.
Lender’s pricing strategy – each lender may have its own pricing strategy based on its business objectives, marketing positioning, and competitive landscape. They also assess their own desired profitability margins and market demands when setting fixed rates.
As a broker we have access to 60+ home mortgage and business lenders who offer a large suite of Fixed rate products. We can assist in choosing the right Fixed option for your requirements or devise a simple split loan structure where you can use both Fixed and Variable rate rates. Call Tony Haworth and our team on: 1300 141 453