Fixed Rates on Home Loans on The Rise

After a relatively stress-free period over interest rates, some financial commentators are advising refinancers and potential borrowers to be aware fixed interest rates for home loans are starting to rise.

In the past three weeks, three lenders have increased rates on one or more of their fixed rate products, with a rise in the average rate for three-year fixed term home loans after 14 consecutive weeks of falls.

The average one-year fixed rate also rose, to 7.03 per cent from 7.02 per cent, while the five-year fixed rate was steady for the second week at 7.81 per cent. This compares to an average basic variable rate of 7.07 per cent and standard variable rate of 7.36 per cent, both of which have held steady for two successive weeks.

The increase of 0.04 of a percentage point, whilst not a large increase, is one that could lead to question whether fixed rates are now on their way up.

Over the three months previous to this week, the average three-year fixed interest rate had dropped by 0.46 percentage points. On a 30-year $300,000 principal and interest loan, this is a monthly repayment of an additional $95.00.

On a positive note, the largest movement for basic and standard variable interest rate over the past four months has only been 0.02 of a percentage point for both loan types.

Choosing between a fixed and a variable home loan is a decision made on individual circumstances, and borrowers must take into account financial circumstances, lifestyle and future needs.