Fixed vs Floating

[McMuffin]

Hi all, I might need a housing loan shortly but I cannot make up my mind on whether fixed or floating rate is better. Two cents anyone?

[HalcyonVI]

Which is better really depends on your personal view on how interest rates are going to move and at what pace. Alternatively, stick to analysts' consensus, in which case, at least there's someone to blame if things go wrong

Another important consideration is the effect a rate hike is going to have on your monthly instalment. If an increase of 1% is going to mess up your lifestyle, you may want to consider fixing your interest rates.

[McMuffin]

Thanks Hal for all the tips and helping me sort out my home loan. Much appreciated

[Curry Chicken]

What about those combo part-fixed, part-floating packages?

[HalcyonVI]

Combo packages are normally for:

1) Borrowers who prefer fixed rates (fixed rate packages currently all come with repayment penalties) but have the intention of repaying a significant part of the loan in the near future
2) Borrowers who cannot decide whether they want fixed or floating rates

A third reason specific to combo packages nowadays:

The floating portion of combo packages usually comes at a much bigger discount than normal floating rate packages. The blended interest rate (average of fixed and floating rates) can be more attractive than if you were to just take a fixed or floating rate package.