Is it time to lock in your mortgage rate?

With interest rates at all-time lows, many market watchers are suggesting this will be as good as it gets for borrowers.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Reserve Bank of Australia’s (RBA) decision to leave the cash rate unchanged at 3% this week, has more borrowers asking themselves whether now is the time to lock in a fixed mortgage. With interest rates at all-time lows and expectations that the loose monetary policy cycle is either at or very near its low, many market watchers are suggesting this will be as good as it gets for borrowers.

The Australian Finance Group (AFG), one of the country’s largest mortgage brokers, reported in its monthly statement that the percentage of new borrowers electing to fix their mortgage rate has hit an all-time high of 29.6% in March. AFG also reported that borrowers were attaining fixed rates of “less than 5% that have widely been on offer.” These rates are impressive and significantly below the big four banks advertised 10-year fixed and variable interest rates of:

Effectively the above fixed rates are pricing in around a 1.3% increase in interest rates from the current standard variable rate. They also show how important it is for borrowers to shop around for the best deal! It’s no wonder that brokers such as AFG and Mortgage Choice (ASX: MOC,) along with the online comparison websites, are proving popular as they provide borrowers with a wide variety of options, such as “27 leading banks and lenders” in Mortgage Choice’s case.

Foolish takeaway

There are of course many decisions to take into account with mortgages, including any penalty fees involved with switching and your view on the long-term outlook for rates. With official interest rates so low, investors would be Foolish to not at least check that they are minimising their overall mortgage interest payments.

Savvy investors are now seeking growth in smaller companies. Discover two stellar small-cap opportunities now, in our brand-new research report, “2 Small Cap Superstars” — simply click here to download your FREE copy.

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »