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Troy H.
Troy H.

With interest rates at an all time low, is now the right time to fix a percentage of my loan?

8 years ago


Hi Troy

Thanks for the question. It is certainly a good time to look at the current array of fixed interest rates, but it certainly depends on your personal situation as there are a number of restrictions to consider with many fixed rate loans i.e. additional repayment penalties or your plans for the property for the next X period of time. Have you sat down and thought about your financial future for the next 3 to 5 years and whether or not a fixed interest rate would fit in with that plan? It is worthwhile to find out with your current lender if there are any penalties or restrictions applicable. There are certainly some low fixed rates available - I recently saw a 3 year fixed rate at 3.64%p.a.!

If you have any other questions or you would like to discuss this further, please give me a yell :)


Kathleen McCormick
Finance Consultant
Search Mortgages.


I wouldn't be fixing the whole amount, just the portion I am unable to pay back over the fixed term. With banks not passing on the cuts, is now the time in your opinion to capitalise on the best rates? I'm a fist home buyer and wonder if the split loan option is a best fit, oppose to the full variable option?

Unfortunately it is not that easy to answer. Yes, the interests looks pretty appealing right now, but would you be upset if they reduced further and you had already locked in? Obviously you need to consider the alternative too which is if you decided not to fix your interest rate and they then went up, would you be angry with yourself?

A split loan certainly allows you to take both options (i.e. the fixed and the variable) and could end up as the better option for you, however without looking at your personal financial position I cannot provide you any guidance in the matter.

Hi Troy,

We use a rule of thumb with our clients when fixing which is to leave as a variable portion an amount approximating your salary for the fixed period. For example, if your salary is $60,000 per annum we would suggest leaving $180,000 as a variable portion to allow for the flexibility Kathleen mentions. Unless of course your likely to have a large inheritance or major lotto win (we all can hope) in which case you might wish to leave a larger portion as variable.

With regards to is this a good time to fix most economists from the major banks seem to indicate that at most there will be possibly two more rate reductions. This is why we are seeing fixed rates which are currently matching variable rates.

The reason many banks are not passing on the full rate reduction is the recent APRA (Australian Prudential Regulatory Authority) requirement to hold higher capital reserves (more money in the bank in case everyone turns up on the same day) as they have less to lend they need to make more profit on the money they do lend. This will probably continue to trend even if there are more rate reductions.

Keep in mind though that the banks much like a casino hate to loose & always build in a margin for the security that a fixed offers you (it's hard to beat the house)

For a first home buyer having the security of a portion of the loan where you can be certain of the repayments is obviously a great thing & we often recommend fixing, even a larger portion for this reason.

Hope this helps & happy to discuss further offline if needed.

Kind Regards
Rebecca A Mitchell

Yes - the best rates are fixed and with variable approx 0.5% higher - usually a good idea - but best to discuss your short and medium term goals with s broker.

I have found fixing is quite popular with many of our clients - most commonly choosing three years fixed terms (not too long not too short). We are able to offer a unique fixed loan which can include a 100% offset account as well, giving you both the peace of mind of a set repayment, a sharp fixed rate and the flexibility and benefits of a full offset account to minimise interest costs.

Let me know if you would like further details.

John Maxwell

I'm usually against fixed loans but the five year rates at some banks are pretty impressive


How did you go with this one? its now been a while. . .Did you fix or did you go variable?

You now have some really powerful experience here about wether NOW is a good time to fix or go variable?

Love to understand how your decision has improved, or compromised your position?


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