Revert Rate Is Crucial For Fixed Rate Home Loans

Finder.com.au warns borrowers who have sought fixed rate home loans. In an article for the Property Update, Michael Yardney (guided by the findings) cautions how the low fixed rates can entice you towards them only to fleece you with the very high revert rate once the fixed rate period ends.

Loans may revert to as high as 1 percentage point after the end of fixed rate tenure. Yardney quotes the example of the average three-year fixed rate loans which stand at 5.07%. It is still bearable once the rates revert to 5.51% after the stipulated three years. However, in many cases, as is witnessed for the 4 major banks, the rates revert up to 6.19%- now that is exorbitant!

You can read the original article here.

What do you make of the shrinking gap between fixed and variable rates? Do you take it as a sign of expected stability in interest rates?