Should fixed rate be an option currently?

I am looking at re-financing my loan (Interest-only) to get a better rate.

Currently I am on 3.97% (started at 4.65% just over a year ago) but am looking at building on a block of land that I own, so I want to reduce payments in other areas to save as much as I can.

My broker has stated he can get me a rate of 3.29% but it will be fixed for 3 years. I think alternative variable rates I can get are around 3.7% at the lowest.

I'm just weighing up if a fixed rate is worth it, as I know rates are decreasing and I guess I'm just trying to speculate overall. Otherwise I may try to get the bank I am currently with to reduce the interest rate as much as they can and stick with my variable loan.

So the tl;dr - Do you think it is the wrong time to lock yourself in to a 3 year fixed rate loan?

 

How far off building are you?

The problem with fixed rates is, you're pretty much committing yourself to that lender for a period of time. Normally not an issue, but what happens if when the time comes the lender you're initially with can't offer you the construction finance? With a fixed rate, you could be facing break costs to move lenders.

I suspect fixed rates aren't going to move upwards any time soon. I'd start with variable for the moment, then reconsider fixed rates when you've got the construction part of the deal locked in.

In essence, keep things flexible until everything is locked down.