Mortgage: Change To Fixed Rate or Keep It Variable ?

The rule of thumb for mortgage is to fixed the rate if it’s going to go up and keep it variable if it’s going down. As a mortgage holder (definition: the one that has a lot of debt to the lender), of course we want to pay the smallest amount of interest. Especially if the mortgage is on our own home (not on investment property) because usually we won’t get a tax benefit from it. After all, mortgage interest is not giving us any added value, it’s just income for the lender as their reward to lend us the money to buy the property.

During 2008 to early 2009, we can see the interest rate across the globe is dropping down due to global financial crisis. And also now we know that on December 2008, the official US interest rate is virtually zero. (While the interest rate like in Australia or UK are still heading down). But, the real problem is how do we know that it’s going to go up or go down next month ? Read more