Fixed rate mortgages set to be good idea again

Australian interest rates are tipped to hit a record-low by winter - and analysts say this makes fixed-rate home loans a good idea again.

The popularity of fixed-rate loans collapsed last year as the Reserve Bank of Australia slashed rates aggressively.

This left some families paying interest rates of more than 9 per cent while others on variable rates saw their mortgages drop.

But fixed mortgages are now seen as possible insurance against a surprise rise in rates.

Aussie Home Loans founder and executive chairman John Symond says the overnight cash rate will hit 2 per cent by mid-2009, down from the present 45-year low of 3.25 per cent.

"I do believe the cash rate will get down to 2 per cent within the next three to four months," Symond said.

The official cash rate has not approached this level since 1959.

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Posted: 7 Feb 2009

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