Amid the cash rate calm and the now little cost difference between the average fixed term home loan interest rate and the average variable interest rate, deciding which type of loan to choose is even more difficult.

According to lender data from Mortgage Choice, Australia’s independently-owned mortgage broker, an average of only 0.1 per cent separates the two home loan rate types today.

Mortgage Choice spokesperson Kristy Sheppard said, “It’s unsurprising we saw increased demand for fixed term home loans in June. Now fixed and variable interest rates are almost on par, choosing between them or deciding to split the loan over both types is an even greater challenge.”

According to her, the big plus of variable rate loans is their more flexible nature, which applies to features as well as interest rate. The latter can be a negative in an economy set to boom because that’s a ripe environment for higher rates.

On the other hand, the big plus of fixed loans is their guaranteed steady repayments but they are priced a little higher and are more restrictive.

Mr Sheppard said “deciding on rate type is a daunting choice people don’t want to get wrong and unfortunately there is no right answer.”

“The major questions for confused borrowers are: how much do you value a guaranteed steady repayment level, how much do you need home loan flexibility, how will you cope if you go variable and rates rise and how will you feel if you fix then interest rates fall during the fixed rate term?”

She, however, stressed that though there is plenty of cash rate movement speculation, it’s been stable for eight months now. The Reserve Bank announced yesterday it is keeping the cash rate on hold at 4.75 per cent, saving Australians from higher mortgage rates and borrowing costs for another month.