With interest rates at an all-time low the question is; should you fix your home loan rate now or keep it variable? This is an age old argument, mostly because there are pros and cons at both ends.

While fixing your rate brings peace of mind (as interest repayments will not vary over time), it can also hurt you financially if interest rates decrease as you aren’t able to take advantage of these savings.

Take the period between 2007 and 2008 when the RBA cash rate was around 7.25% and many feared that rates could hit double digits. If you were to lock in a fixed rate during this period you would have missed out on considerable interest savings generated by rates falling to 2.5 per cent over the next 5 years.

Trying to pick the best time to fix your home loan rate can be fraught with danger as you are essentially betting against the Banks economists who forecast interest rates into the future and use this data to arrive at a fixed rate.

In my opinion, keeping your loan variable is the best option as this way you are not locked in and have the added benefit of making additional repayments to your home loan (often with a fixed rate you are prevented from making additional repayments). While a fixed rate will provide certainty, if rates move against you, it can be very costly.