INSIGHTS WITH EVALESCO

When do we think is the best time to fix your loan, and why?
by Kate Ferraro | 28 July 2021

TOPICS DISCUSSED

Our reasons behind raising rates
Variable rates will be impacted at some point
Fix your loan while we have low interest rates

Interest rates change frequently, they rise and fall. Banks set interest rates to respond to market conditions by raising or lowering interest rates and lending conditions to stimulate or dampen market activity and balance growth with risk tolerances.

Whilst homeowners have enjoyed record low interest rates for some time, the burning question that lingers for many borrowers is, “When and why should I fix my home loan interest rate?”

In recent times we have started to see movement with banks raising rates, specifically fixed rates.

The reason for that is that the RBA (Reserve Bank of Australia) has provided what is known as term funding to the banks as a result of the pandemic and subsequent economic conditions. This was a way for the government to support the banking industry by effectively lending them money, in the billions of dollars, at a rate of 0.1 percent. This facility has ended as of June 2021 and now the banks will have to return to traditional funding methods to raise capital to lend out to borrowers. In practice, they must pay more to investors, or depositors, to have the capital to lend. This causes interest rates to fluctuate, as we have recently seen.

The changes we are witnessing will have an immediate impact on fixed rates, as terms must be locked in. Variable rates will be impacted at some point as banks examine the mix of fixed and variable rates, as well as the impact of the pandemic and economic conditions on investors and residential borrowers. Variable interest rates are more influenced by the RBA, and as the economy recovers and employment levels return to pre-pandemic levels, borrowers will see the impact on variable interest rates.

As a result, right now, it is a great time to look at fixing your loan while we have these low interest rates. You may consider fixing all or part of the loan depending on your Individual circumstances, strategy and goals.

Locking in a good rate may appear to be a daunting task, but with the assistance of an expert, like the Evalesco team, the process can be relatively simple. So, when it feels right, act!

SHARE OUR INSIGHTS

Share on Facebook

Share on Email

Share on Linkedin

NEWSLETTER

Sign up to get the latest insights with our newsletter delivered straight to your inbox

Slide
“How will I measure the value or success of receiving financial advice?”

We believe the true value of financial advice isn’t found in dollars and cents (although this is important too!) but in the peace of mind a financial plan can provide. It’s knowing where you want to go and how to get there, with a dedicated team behind you every step of the way.

Slide
“How do I know Evalesco is the right fit for me?”

We know the impact of good holistic financial advice can make and we have the life experience, technical capability and quality support team that can make that difference for you. We’ve empowered over 1000 families through the delivery of great financial advice, to be healthy, wealthy and happy.

Slide
“How do I know how much money I will need to retire?”

The amount of super you’ll need when you retire depends on your big costs in retirement and the lifestyle you want. The Associate of Superannuation Funds of Australia (ASFA) estimates for a single $44,224 a year and for couples $62,562 a year is how much you may need. This is only an indicator and our advisers assess everyone’s individual circumstances.

Slide
“Why should I pay for financial advice?”

The fees we charge for financial advice is only a fraction of the value we derive for our clients, meaning our clients are always better off after seeing us. Rarely do we encounter a new client invested appropriately for their needs, with adequate risk protection, structuring and estate planning provisions in place. Even small tweaks to a financial plan over a long period of time can result in drastically better outcomes for our clients which eclipses the fees of the financial advice. Additionally, you can opt-out of an ongoing fee arrangement at any time.

Slide
“How do you charge for your services?”

In our discovery meeting with you our advisers discuss the initial advice fee and the ongoing fees associated with our services.

Slide
“What is the process for getting our own personal financial plan?”

After our initial phone call to discuss why you are seeking a financial adviser, we arrange a discovery meeting that outlines what is important to you, your current position, our areas of advice, our approach. We then present a Statement of Advice (SoA) to discuss your goals and our recommendations and go through the steps of how to proceed to the implementation stage. After signing the SoA, we discuss your questions, get you to sign the authority to proceed and complete any application forms before implementing the recommendations detailed in the SoA.

Slide
“Should I pay more off my mortgage or put more money into super?”

One thing to consider is the interest rate on your home loan in comparison to the rate of return on your super fund. Before making a decision, it’s also important to weigh up your stage in life, particularly your age and your appetite for risk. Whatever strategy you choose you’ll need to regularly review your options if you’re making regular voluntary super contributions or extra mortgage repayments. As bank interest rates move and markets fluctuate, the strategy you choose today may be different from the one that is right for you in the future

previous arrow
next arrow

Evalesco Financial Services Level 17, 20 Bond Street Sydney NSW 2000
Phone: (02) 9232 6800

The information provided on and made available through this website does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Evalesco Financial Services do not warrant the accuracy, completeness or currency of the information provided on and made available through this website. Past performance of any product discussed on this website is not indicative of future performance. Copyright © 2019 Evalesco Financial Services. All rights reserved

Evalesco Financial Services Pty Ltd is a Corporate Authorised Representative (325313) of Australian Advice Network Pty Ltd.

ABN: 13 602 917 297 AFSL: 472901