The Reserve Bank of Australia recently cut interest rates again in February and since then the borrowing cost to consumers have continued to fall. With rates being so low, money is very cheap to borrow. Rates could fall even lower and make borrowing for a home or personal loan even cheaper but there is no way of knowing for sure until it happens. Most home loans in Australia are variable rate loans but now could be a great time to lock in low fixed interest rates for your home.

If the Reserve Bank’s interest rate drops even lower it might not necessarily mean that fixed interest rates will go any lower. If the RBA is expected to lower rates a bit more then lenders are more likely to offer loans with fixed interest rates that are lower and more competitive. The most recent drop might be giving potential home owners a golden opportunity to get into their dream house.

Fixed Interest Rates Vs Variable Rates

It still seems that most Australians choose to get a variable rate loan even with rates this low because there is the perception that rates could possibly go much lower. What might seem like a small change in the interest rate on a mortgage can end up being a huge amount of money over the life of a loan. If interest rates do go lower then it will give borrowers an even better opportunity to get a home loan at an incredibly cheap price.

Loans with fixed interest rates will be at a higher rate than a variable rate loan and can seem like a waste of money at the time but it pays to have a long outlook. Think about how interest rates might fluctuate over the course of a decade or more. You might be paying more now with a fixed rate loan but it could save you thousand or even hundreds of thousands over the life of a loan if or when rates rise again.

Now is a great time to get advice from an expert on what the cost difference would be over the long term between a fixed or a variable rate loan. Australians have a great opportunity to borrow money at incredibly low rates so if you are considering buying a home do the research on whether you should lock in at these rock bottom rates.