Should I fix my investment property mortgage now or wait for the RBA?
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There is no universal right time to fix an investment property loan. Fixed rates reflect lenders’ expectations about future funding costs and may change before the RBA cash rate. Investors should compare total costs, loan flexibility, refinance timing and the effect on their entire property portfolio rather than relying on a forecast of the next cash-rate decision.
Why are fixed mortgage rates changing before the RBA moves?
The cash rate is only one influence on mortgage pricing. Lenders also consider wholesale funding costs, bond markets, competition and expectations about future monetary policy. That means a fixed-rate offer can change before the Reserve Bank announces its next decision.
Our institutional research has identified higher Australian bond yields and repricing of fixed-rate offers as developments to watch. These are dated market observations, not evidence that every lender or loan product is moving in the same direction. An investor comparing options should obtain current written quotes for the loan amount, repayment type and features they actually require.
Is fixing an investment property loan safer than remaining variable?
A fixed rate may provide greater repayment certainty for a defined period. That can be useful when an investor needs predictable cash flow across several properties. But fixed terms can involve break costs, restrictions on extra repayments, fewer offset options or reduced flexibility if a property is sold or refinanced.
A variable loan may preserve features and flexibility, but exposes the borrower to future rate changes. Neither structure is automatically preferable. The right comparison is the total cost and practical consequences under more than one plausible interest-rate path.
What should an investor review before a fixed-rate expiry?
Start with a loan-by-loan schedule: current rate, balance, fixed-term end date, repayment type, offset arrangements, securities and any likely changes in ownership or acquisition plans. Request the lender's post-expiry rate and compare suitable alternatives. Include discharge fees, new-loan costs, potential break costs, loan features and serviceability outcomes.
For a multi-property investor, refinancing one loan may affect the rest of the portfolio. The assessment should consider whether security arrangements, interest-only expiry dates and debt allocation still support the investor's longer-term objectives.
Could higher interest rates affect my ability to buy another property?
Yes. A lender's serviceability assessment can apply rates and expense assumptions that differ from an investor's actual current repayments. Rental income may be shaded, and all existing liabilities are considered. Equity alone does not establish additional borrowing capacity.
This is why an investor who earns a substantial income and owns several properties may still find the next acquisition difficult to finance. A review of lending structure can be worthwhile before searching for another asset.
Should I wait for the next RBA rate cut before making a decision?
Waiting is itself a decision, with potential costs and benefits. The appropriate approach is to compare the available terms today against the investor's likely holding period, cash-flow tolerance and need for flexibility. A rate cut, if it occurs, would not guarantee a particular fixed or variable mortgage outcome.
The Ramsey approach is to assess the portfolio that exists now. What happens to repayments if borrowing costs stay elevated? What if a loan expires before an expected policy change? What would a refinance do to future borrowing capacity? These questions provide a sounder basis for action than trying to identify the perfect announcement date.
What does a portfolio-level mortgage review include?
A useful review considers cash flow, debt structure, loan expiries, property-level rental performance, liquidity buffers and borrowing capacity together. Some investors will benefit from refinancing or adjusting their loan mix. Others may be better served by retaining existing arrangements and preparing for a future acquisition.
The aim is not to force a transaction. It is to understand the options and make a considered decision while those options remain available.
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Article Contributors
Written by: Ewan Ramsey
Founder and CEO, Ramsey Property Wealth
Research by: Dr Prabath Morawakage, PhD, CPA
Head of Property Economics and Intelligence, Ramsey
Property Wealth