Fixed borrowers watch in anger as interest rates tumble
05/02/09 09:49 AM
Just 12
months ago, as the Australian economy was
threatening to overheat with inflation taking off,
the Reserve Bank was pushing interest rates up
aggressively and market economists were all saying
they would go higher.
Desperate to limit the damage, many struggling home mortgage holders locked in fixed interest loans.
But now they are watching with no small measure of anger and frustration after the official rate tumbled in five months from 7.25 per cent to 3.25 per cent.
Desperate to limit the damage, many struggling home mortgage holders locked in fixed interest loans.
But now they are watching with no small measure of anger and frustration after the official rate tumbled in five months from 7.25 per cent to 3.25 per cent.
Variable
rate borrowers will save approximately $185 a month
on a $300,000 mortgage, with some market economists
saying the official rate could drop further, even
to 2 per cent.
But around 43,000 home borrowers who locked in high interest rates when the economy was overheating face fees of tens of thousands of dollars to go variable.
"We are worse off $350 at the moment a month, purely because we fixed our home loan early last year," says home owner Penny Batovas.
"And it was based on their advice that we did fix. Each month, they were increasing interest rates and not giving any time to see what was the impact of that increase."
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But around 43,000 home borrowers who locked in high interest rates when the economy was overheating face fees of tens of thousands of dollars to go variable.
"We are worse off $350 at the moment a month, purely because we fixed our home loan early last year," says home owner Penny Batovas.
"And it was based on their advice that we did fix. Each month, they were increasing interest rates and not giving any time to see what was the impact of that increase."
Full Story