We are thinking of fixing our home loan, probably for 2 or 3 years. Looking at sites like Finder and Mozo the 2 year fixed options are as low as 3.7% but the comparison rate is 4.6 – 4.7%. Why is there such a big difference and is now a good time to be fixing rates?

Kate. This is a very good question. In determining a comparison rate, there is a legal requirement to base it on a loan amount of $250,000 over 25 years. This may not be your actual situation. The other matter is that it will be calculated on ( say) two years of the good fixed rates you are looking at and then the remaining 23 years of the Lenders Standard Variable Rate with their current advertised discounts. This is called the Reversion Rate (post the Fixed Period)
Via a Broker, it can often be possible to negotiate a much better Reversion Rate at the front end of the deal. This negotiation would then bring down the Comparison Rate for your particular circumstance
If you would like to give me a call, I have a good calculator on my web site that will calculate true comparison rates for your circumstance. I would be happy to talk you through it and give you some good options to consider.

PS. I think now is a very good time to be considering a fixed rate, but in some cases it may be best to have a piece of both fixed and variable. Hope to speak soon.

Best Regards
Ken Olds
Customers First Mortgages & Insurance
www.AskKen.com.au
1300 ASK KEN

Hi Kate,
The comparison rate reflects what happens at the end of the initial fixed rate period. Appreciate that the comparison rate is not as helpful as it is meant to be, based on the parameters used to determine it.
As to whether or not this is a good time to be fixing your home loan rate, there is no definitive answer as it is determined by a whole range of factors that are specific to your situation.
Also appreciate that not all fixed rate loans are the same.
Some offer 100% offset, other allow unlimited extra repayments whilst others only allow limited extra repayments.
Happy to chat if you wish.