There is considerable uncertainty in the market place as to where interest rates may be heading. What you need to be aware of is that you can often negotiate with banks to obtain better rates.
- Interest rates for residential property are currently at record low rates. Subject to your level of debt, loan amounts and other loan specific factors, the variable rates can be as low as 3.69%, whilst some banks are offering fixed rates for three years at 3.59% and five year rates as low as 3.80%.
- When looking at any available rates you need to check any fees and charges, both upfront and ongoing, which might apply to the loan.
- Commercial rates are higher compared to residential rates. Establishment costs and ongoing costs can also be more expensive.
- Rates for superannuation funds whether borrowing residential or commercial property are generally higher. People often ask whether it is time to fix interest rates.
The answer is that it depends on your view of the economy. If you believe that things will continue to deteriorate, then variable rates will continue to fall.
However, you should be aware that fixed rates usually run ahead of variable rates. By this, we mean that as an economy deteriorates, fixed rates are often already lower than variable rates. If you are uncertain as to what lies ahead you could consider locking away some of the debt and leaving the balance variable.