Fixed vs Floating


By Brendon Ojala


Since last writing there has only been very small movements in interest rates.


A good one year rate (for an owner occupied loan with at least 20% deposit) would be in the 4.2% range, drifting up to a good 3 year rate at 4.7%.  A discounted floating rate should be around 5.2%.


Each month we get the main banks “interest rate” comments.  For many months now the ANZ economists have been saying the “sweet spot” is still the 1-year rate.  This rate is generally the cheapest on the market.  And it also indicates they don’t see any large rises in rates in the next year, so the premium for having longer certainty is small right now.


Last week I attended a conference where economic reporter and commentator Bernard Hickey presented his observations on Interest Rates amongst other things.  His reflection is that our economy is in a long term low inflation environment, meaning a long period of low interest rates (and high asset prices)

If ANZ and Bernard are right, take the lowest rate on offer!  If that makes you nervous, “hedge your risk” by splitting your loan over different fixed periods.


As everyone's situation is unique and there certainly isn’t a “one strategy fits all” solution out there, so, as always, before doing anything, talk to your Velocity Mortgage Adviser. 


Brendon Ojala a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.