Research by RateCity, Australia’s leading financial comparison website, has found that sticking to a variable rate over the next five years could save mortgagees thousands of dollars.
According to RateCity, if interest rates rise by up to two percent over the next five years, the average standard variable interest rate would increase from the current 5.25 percent to 7.25 percent. Mortgagees could potentially save $10,568 of interest on a home loan of $275,000 if expected variable rate rises were factored in, rather than locking in a fixed rate for the next five years at the average 7.25 percent.
The research also found that paying an extra $165 per month off a home loan of $275,000 for the next five years can save about $1,400 in interest as well as reducing the debt by $11,279.
Michelle Hutchison, consumer advocate at RateCity, said it’s all about the timing when it comes to choosing a fixed or variable rate home loan.
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