Fixed vs Variable Loans?

From: Alan Hill


The following article in Saturday's SMH may be of interest:

http://www.smh.com.au/news/0202/09/biztech/biztech16.html

Certainly in the 1990's (which admittedly was generally a decade of falling interest rates)it would appear you would have been generally better off on a Variable rather than Fixed rate.....at least in dollars paid in interest.
Going variable versus fixed I guess really depends on a number of other factors though too......not the least of which may be you sleeping better on a fixed rate and also the need to have access to cash when Variables do rise. As usual, horses for courses.

Would have been interested to see the percentages if the 1980's had also been included. This would have also included some periods of significant Interest Rate rises.....

Still, an interesting article.......


:)
 
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Reply: 1
From: Gail H


It is interesting. But like many investors, I see fixed rates as insurance, rather than a question of maximising profit. Like car insurance, its worth it even if the car never crashes. Serious IP purchasers can have mega debt, and would lose the shirt off their back in the case of an (admittedly unlikely) interest rate spike. So, I just see it as an insurance premium which ensures that my shirt stays where it should.

Cheers
Gail
 
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