Fixed My Margin Loan Rate Again

 

The Reserve Bank of Australia Building

Same as last year, I just fixed my margin loan rate for the next financial year. The variable rate offered by CommSec was 9.4% and the fixed rate for one year is 7.54%. The Reserve Bank would need to cut interest rates by an average of 1.86% over the year for the variable rate to be better. The current RBA cash rate is 3.85%. Under the assumption that they cut in a straight line, even if they cut rates to zero by June 2026 the fixed rate is better. The only way the variable rate would be better is if they frontload a very significant cut of say 1.5% and then end up with a cut of 2.5% or so in total at the end of the year. I don't see them frontloading to that degree given history. Anyway, we will see if I was right...