Over the past few weeks the most recurring question that appears to be asked, is should I fix my mortgage.

As I am not an economist or financial adviser I am unable to advise clients if they should fix their home loans / investment loans.

I can however on a personal level I can share that I personally, have not fixed interest rates on my investment loans.

My thoughts behind this were that if I were to fix now I would be paying almost two percent higher in interest which for me would equate to nearly $15,000 per year. If the rates only remained as they are for only twelve months I was $15k better off.

I have however been putting extra money into my offset account which when the rates rise (and hopefully not all at once) that I will have created a buffer to cover the increased repayments.  

Obviously my personal strategy does not suit everyone and rightly so, each person’s circumstances are entirely different.

There is an interesting article titled “Borrowers in a fix” by Katja Buhrer in this month’s Smart Investor Magazine based on this very subject.

The article goes on to say that Not only do fixed-rate loans historically cost home owners more than their variable counterparts, but if there were a time to enter into a fixed-rate loan, it’s now passed.

Fixed rate home loans have jumped more than 1 percentage point over the past four months as the market grows increasingly confident the market will recover more quickly than first thought, giving the Reserve Bank of Australia greater scope to raise interest rates. “The horse has bolted,” says chairman of the website Rate City, Andrew Willink. “While there’s a lot of talk about interest rates going up, consumers should not panic into a fixed-rate loan.”  

Canstar Cannex estimates that three-year fixed rate mortgage holders would have to wait until mortgage interest rates hit 9.27% to come out equal with variable mortgage rate holders on a package deal.  The article goes on further to say that it’s worth noting some economists believe the RBA won’t hoist rates as quickly as anticipated. So fixed-rate yields could even fall in coming months as interest rate expectations are relaxed.

 You may be able to view the whole article on the smart investor website.