Fixed loans fall just in time for Spring | John McGrath

In his regular Switzer column John McGrath wrote about the drop in fixed rate home loans for buyers.

Here’s what he had to say:

What fantastic timing. Many banks have just reduced their fixed rates because funding has become cheaper and they want to attract as much new business as possible, particularly as Australia’s two biggest property markets continue to boom and sales increase in other markets like Brisbane.John Mcgrath

When sales volume rises, obviously so does demand for new home loans and the banks want as big a piece of the pie as possible, which means fierce competition and great deals for the consumer.

The big four banks are now offering three-year fixed deals of 4.94% and five year rates of 4.99%. That is incredibly low and represents an amazing opportunity for today’s buyers.

Of course, variable rates offer far more flexibility and you need to take this into account when considering fixing a loan.

But if you like the idea of certainty around repayments and you have no intention of selling within the next 3-5 years (which you should never do, by the way, on investment properties), then fixing appears to be a smart choice right now.

The ability to fix your loan at its most expensive stage – the first few years, at a rate below 5% is truly amazing.

What an opportunity! I can’t hammer this home enough. So many people let life-changing opportunities in the property sector pass them by – not because they don’t recognise them but because fear holds them back.

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How many times have you heard family members, friends, colleagues lament that they should have bought a property – or properties, years ago?

How many stories have you heard about a property someone almost bought and how much it has gone up in value since then? They’re all missed opportunities.

When it comes to investment, I say it’s pretty much always a good time to buy as long as you’re in it for the long term – which is how it should always be with investment.

Even if you pay a bit more today because the market is hot, the intrinsic value of the property will soon catch up and 20 years down the line, it’s simply not going to matter anyway.

Of course, always stick to your budget, but when you’re buying for the long term the important thing is to get into the market.

These days, people over-complicate property investment and it’s so easy to get caught up in the ‘analysis paralysis’.

You could spend weeks online reading about how to choose a great investment property; and while researching your selected area and property values is important, common sense should also guide you.

Don’t buy on a noisy main road. Don’t buy a property that is dark inside. Do buy a property close to amenities. Do buy in nice leafy streets. Do buy close to major job hubs. It’s pretty obvious, right?

The busiest season of the year begins next week and these lower fixed rates couldn’t have come at a better time.

Don’t bother with a rate lock fee – the rates have just changed so they’re not going to go back up any time soon. Take your time this Spring, buy your property and lock in a great deal!



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Australia's leading independent property commentator, brings together leading authorities on the property market. Each week at Real Estate Talk we take a fresh look at the property market so you get all the facts to help you make the right choice.
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