As most readers will already know, the Reserve Bank board announced this week that they would be leaving official interest rates on hold for at least the next month. However, despite the RBA maintaining the current cash rate of 1.50% since August 2016, many Australians are clearly expecting the next change in rates to be upward. In fact, a recent survey of home owners by an Australian Credit Union found that almost one in five people with a variable or split-rate home loan are now considering switching to a fixed-rate loan.
Males more likely to choose fixed rate loans
The survey, conducted by Gateway Credit Union, found that more men than women were looking at switching to a fixed-rate home loan, (22.4% of men compared with 14.7% of women). This statistic would come as a surprise to many given that females have traditionally tended to be more risk averse than their males when it comes to investment decisions.
Younger home owners choosing fixed rate loans
Another interesting trend to emerge from the survey was that younger Australians seemed more inclined to consider a fixed rate loan than older home owners. The survey found that over 32% of respondents aged under 29 were considering switching their loan to a fixed rate mortgage. The figure for those aged 30 to 49 was 20%, whilst only 9% of those aged 50 and above were considering that option.
Uncertainty on interest rates
Survey results like these would seem to indicate that Australian home owners are becoming more cautious about the outlook on interest rates, particularly those with more time remaining to repay those loans. It is also likely that recent moves by the Banks to introduce small out-of-cycle rate increases, along with concerns about the Federal Government’s new bank levy, are encouraging more people to look for more certainty on future repayment levels.
At Ian Reid’s Vendor Advocacy, we always recommend that people seek out independent expert advice before making any decisions on their home loan. However, if you would like experienced and independent advice on your real estate plans, don’t forget that our Vendor Advocates are always happy to provide you with advice and assistance at any time. You’ll find lots of helpful advice on selling a property tips in our FREE booklet, “Fatal Real Estate Traps Exposed”, so why not download a copy while you’re here?