3 year fixed and 5 year fixed rates have converged. In particular, fixed interest rates are sitting at historically low levels. This has made many people think a lot more about the option of locking in an interest rate for a fixed term. This decision should not be made lightly. If you are inclined to fix, please call us to discuss the pros and cons.
According to the ASX futures market, the outlook for variable interest rates is remarkably stable. They are speculating that the RBA will keep the cash rate at 2.50% p.a. for a further 18 months.
The Aussie dollar is an economic indicator that is worth keeping an eye on if you are wishing to understand the RBA’s cash rate decisions. If the Aussie dollar drops in value against the USD (which is happening at the moment), this theoretically gives our RBA more flexibility to lift rates. If inflation lifts we could potentially see a rate rise. Having said that, inflation remains low so the general sentiment is that variable interest rates should stay low.