Australians looking for home loans have been advised to consider all the consequences of signing up for fixed-rate home loans.
Consumer Action Co-Chief Executive Officer Carolyn Bond clarified that these rates are practical for people who are certain they will be unable to handle an increase in interest rates.
Conversely, she noted that a variable rate mortgage may be suitable for those who can handle the rate shifts.
Bond clarified that this type of mortgage will allow Australians to benefit from any reductions in interest rates.
She cautioned that those opting for a fixed rate should “be aware that if rates do go down, you can be stuck with a higher-interest loan that will cost you a bomb to get out of.”
Her warning came after property investor Peter Koulizos advised those seeking homes to closely monitor their prospects and consider placing an offer once the seller reduces the price.
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