Back in March 2020, at the start of the pandemic, 13.38% of new borrowers were choosing fixed-rate loans and 86.62% were choosing variable. But in March 2024, a staggering low of only 1.40% of new loans were fixed, compared to 98.60% variable, according to the Australian Bureau of Statistics.
The reason so many borrowers are going variable right now is because of a widespread belief that interest rates are at or near their peak, which means variable borrowers would benefit from any future rate cuts. Conversely, in July 2021, when interest rates were at record-low levels, 46.02% loans were fixed, while only 53.98% were variable. If you’re wondering whether fixed or variable is right for you, here are the main pros and cons of each option:
Pros of fixed-rate loans
– Interest rates don’t change, making budgeting easier
– You’re protected from rate rises
Cons of fixed-rate loans
– They tend to offer fewer features
– You don’t benefit from rate cuts
Pros of variable-rate loans
– They tend to offer more features
– You benefit from rate cuts
Cons of variable-rate loans
– Interest rates can change any time, making budgeting harder
– You’re not protected from rate rises
The team at The Finance Co. Group are available to walk you through the loan process and help choose the right loan for you. You can reach out to them on 8004 5020.
