Property Prices are on the move and, reviewing the recent media attention, interest rate rises appear to be heading our way soon and the banks are lining up with new products to secure your business.
 
" BankWest Mortgage Could Spark Price War.  A NEW price war is set to erupt across Australia’s $860 billion home lending market, with Commonwealth Bank owned – BankWest to launch a new mortgage product that will have an interest rate cap until late 2012." The Australian, September 2009
 
So the question that is on the mind of many investors appears to be...“To Fix or Not To Fix?”
 
This doesn’t have to be a tough decision; this exclusive Mortgage Bite is here to help you through the mortgage maze.
 
Do you:
        Want predictable repayments?
        Foresee major changes to your family arrangements, job or business?
        Believe rates will rise in the near future?
        Fully understand exit penalty costs with early repayment?
 
If you answered YES to most or all of these questions, a fixed rate loan may suit. It could be time to lock it in now.
 
Why should you choose a fixed rate loan?

        It will help you budget to manage your cash flow, stress free.
        You’re looking for certainty in your monthly loan repayments to the bank.
        Property owners who have a number of financial responsibilities can feel secure knowing that their repayments will be consistent, and that their interest rate is protected from further increases during the term of the fixed period.

Is a variable loan is the way to go?
 
        You will benefit if the interest rates increase.
        Minimal exit costs on early repayment (check with your lender).
 
A Variable housing loan gives flexibility.  Any surplus cash each month can help to pay the loan off faster.  Extra repayments made to the loan can also be redrawn should the funds be required elsewhere.

To Fix or Not To Fix - what would your answer be at this moment?

Most expert pundits would say even Blind Freddy could have seen that interest rates were bound to rise when the RBA met today and although a rate rise of just 0.25% is pretty small, leaving the new rate at 3.25% which is still extremely low, a rise is still a rise.

It hasn't taken long for some in the real estate industry to warn that now would be a good time to buy as a rate rise could see prices increase but is this a real concern?

With Spring in the air as we enter the traditional real estate selling season coupled with the announcement of the recent natural resource contracts and the general belief Australia is moving out of the GFC, Blind Freddy could have a go at predicting the WA Real Estate Market is going to continue to firm up as we move toward the end of the year and he would most probably be on a winner here to. Some believe it already has. Maybe the RBA concur.

There may be any number of good reasons to buy real estate now but the fear of a price rise due to a 0.25% interest rate rise? Well, you tell us...

Last Tuesday saw the RBA cut a further 25 basis points (or 0.25%) from the central interest (cash) rate, bringing Aussie rates to a 49 year low of just 3%. Almost immediately, the main retail banks either took the cut for themselves (NAB) or only passed on a 0.1% cut.

With banks going bust overseas, being nationalised or amalgamated, is this evidence that our 'strong' banks (4 of the most secure 11 banks globally are our 4 Pillars) are protecting themselves? Fair enough? If the 'cost' of the global financial crisis ('GFC') is we don't get much of the rate cut, is that better than have our banks fall over?

Or is this just greedy banks taking what's rightfully ours?

Click Comments to have your say!