The RBA has kept the cash rate on hold at 0.25 per cent but borrowers should consider fixing

The Reserve Bank of Australia has kept the cash rate on hold but experts have revealed why now is the perfect time to fix your home loan rate.

Borrowers should consider fixing their home loans to save as many deals have fallen as low as 2.09 per cent, experts say.

The Reserve Bank of Australia board kept the cash rate on hold today at 0.25 per cent and there’s been heightened speculation this week rates could fall into negative territory.

Finsure managing director John Kolenda, who manages companies including 1300HomeLoan, said mortgage customers should weigh up locking in their rate to save.

“Consumers should consider fixing a part of their mortgage,” he said.

“With the competition that has arisen over the last couple of months we’ve never seen fixed rates at such attractive terms.”

But Mr Kolenda was always a “gamble” because it is possible interest rates could fall further.

“Consumers have to be comfortable with fixing and stay true to why they did it regardless of what happens,” he said.

1300homeloan director John Kolenda said now was a very good time for mortgage customers to fix their loans.

“They get a benefit if rates move up because they locked in at a good time, but the consideration should be about doing what is right for them and having the certainty over what repayments will be for a set time gives borrowers some comfort.”

Customers who do opt to fix should be mindful however there are break costs if they try and exit the fixed-rate period prematurely which happens when a customer want to sell their property or refinance.

Latest analysis from financial comparison website RateCity showed the lowest two-year owner occupier principal and interest rates are at just 2.09 per cent, offered by well-known lenders ING and HSBC.

While three-year fixed rates are only slightly higher at 2.14 offered by ING and lenders Macquarie Bank and St.George/Westpac are offering 2.19 per cent.

Meanwhile the commentary this week on negative interest rates would allow the nation’s major banks to cut their mortgage rates and allow borrowers to take on loans at an even lower cost than now.

One of the nation’s largest mortgage broking firms, Aussie’s chief executive officer James Symond said many borrowers are actively looking to refinance.

Aussie Home Loan's chief executive officer James Symond said there are many incentives to get borrowers to switch banks right now.

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“Our recent research shows there is a strong appetite among mortgage holders to refinance and we are seeing a growing number of people looking to understand their options which could include looking at fixed or split loans,” he said.

“There are good incentives in the market to refinance at the moment, including cashbacks, and low rates which continue to sit at historic lows and will do so for months to come.”

Latest figures released by the Australian Banking Association showed about 745,000 loans in Australia worth a combined $224 billion have been deferred during the COVID-19 period.

@sophieelsworth

Originally published as The RBA has kept the cash rate on hold at 0.25 per cent but borrowers should consider fixing