Fixed Mortgage Rates Are Low: Is It Really Time to Buy That Dream House?
The property market is driving fixed rate mortgages down across the board. Over the last month, we have seen major lenders and non-major lenders announce reductions on their fixed rates of up to 60 basis points.
According to Dana Fraser, Credit Adviser at Shore Financial, around 40 lenders have dropped rates since the start of 2019, and this downward trend has created more competition across all lenders.
As a result of the recent news, many people who are looking to time their way into real estate deals are thinking to pull the trigger. Interest rates are only the tip of the iceberg when thinking about moving into property, however. Let’s take a look at what advantages fixed rate mortgages actually give homeowners and which are just smoke and mirrors.
Looking at the Numbers: What Is Actually Going On
Lenders are making moves on their fixed rates ahead of the actions of the Reserve Bank. There is no indication, however, that the Reserve Bank is going to touch rates anytime soon.
Stagnant employment and wage numbers are keeping the RBA from wanting to mess with monetary policy too much. The fixed rates available in the housing market is a beneficiary of this unfortunate news. There are lesser people with the money to get into the housing market, but the people who have it are in good spirits right now.
If you have cash on hand, you may be able to negotiate with lenders for rates that are not necessarily being advertised. Lenders know that now is the time to lock in long-term buyers, and they are willing to give up a little bit on the front end to get those 15- and 30-year contracts.
With just a bit of leverage and willingness to compare rates, you can get lower than lower rates. Having a long-term relationship with your mortgage broker is one of the best ways to create this situation for yourself.
Low fixed rates: How to plan for your budget?
Low fixed rates don’t mean much if your budget still doesn’t cover all your mortgage (and other) expenses. Make sure that you follow the best practices below when vetting your budget:
- Know how much you can afford. We have free mortgage calculators here that you can use to get estimate about how much you will pay a month. However, the mortgage is only the first cost that you need to consider. While you are paying down the mortgage, you still have to deal with repairs and maintenance. The lawn still needs cutting, the bills need to be paid, and there may be a paint job or two that needs to be done.
- Determine if you need to refinance. There are several reasons why refinancing can make sense for you. If your lender’s rate is not competitive, if there are better deals available, if your property’s value has increased, or if you’re experiencing a major change in your financial situation — then you might want to consider refinancing.
It is definitely a great time to review your current home loan and ensure you are on a competitive interest rate. If you’re planning to buy a home this year and need any assistance, speak to someone at Shore Financial to see where you stand. Fixed rates as low as 3.44% can be yours today, but only if you get in touch with us now.