But now they're under siege as smaller lenders start to offer very attractive rates.

David Richardson investigates whether to fix or keep riding the variable rate roller coaster.

To fix or not to fix. That is the question. Security against flexibility, a question faced by new home owners like Tim and Marlene Pracy.

“At the moment our variable, our repayments are pretty good so we are happy to keep our rate variable," said Marlene.

The Pracy's have owned their home for just 3 months, first home buyers who have done everything right to put their own roof over their heads and they won't be rushed into anything.

“We got our home loan at the amount we did because we like to live within our means so we made sure we didn't have any other liabilities at the time other than our home loan. so we can afford it if there is a little bit of a rate rise anyway," said Marlene.

The young couple, now with a baby boy, have factored in a comfort zone for themselves, a buffer against interest rate rises. But with fixed rates hitting rock bottom, the lowest level in 5 years, they're be mad not to at least look at the idea.

Their broker Kim Narayan from Mortgage Choice has seen interest in fixed mortgages skyrocket.

“I've definitely had more inquiries about fixed rates, I've certainly got a lot of clients who are looking to do a split, so have part of their loan variable and part of it fixed,” said Kim.

The founder of Switzer financial planning, Peter Switzer, believes if you fix, now's the time to do it, when rates are low. But beware, you can lose offset and redraw facilities.

“I think when they're low that's the best time for people to think about fixing. They still could lose out, the world economy could be depressed for three years and interest rates stay low. But we do know that banks have been very reluctant to pass on interest rate cuts, so they'll be happy to raise them." said Peter Switzer

The big four have tailored fixed and variable packages to maximise their 80% stake in a 1.1 trillion dollar mortgage industry.

The Commonwealth's wealthy package offers fixed 3 year rates at 5.69%, their variable 6.15%.

Westpac premier advantage offers 5.69% fixed, 6.23% variable.

ANZ's breakfree is 5.79% fixed, 6.18% fully flexible.

NAB's Choice package is the same for 3 years fixed...6.17% variable...

All four have about $400 in fees.

Michelle Hutchison from RateCity crunched the numbers on the best deals being offered, fixed and variable, and none are the big 4.

V-Plus home loans has the best fixed rate at 5.49%, variable at 5.81%.

LJ Hooker's Leverage plus offers 5.53% fixed, 6.03% variable.

U Bank U home loan is 5.54% fixed, marginally more variable.

While the Bank of Qld is 5.55% locked in for 3 years, 6.64% for full flexibility.

The online market making a massive push for business but is still small compared to the big four.

“There's huge potential savings by switching to on-line lenders, smaller lenders are much more competitive and you can save thousands’ of dollars per year by switching to a small bank." said Michelle.

Tim and Marlene won't be spooked yet into locking down their loan but others are jumping at the five year lows.

The golden rule - do your homework.

“I think the most important thing is never ever wait too long to fix. if you are worked because you've borrowed too much and you're in a stressful situation, if rates rise then you should think about fixing. if you’re still a nervous nelly do a 50-/50. do a cocktail. half fixed. half variable.” said Peter Switzer.

Join our live chat with Michelle Hutchison from RateCity at 7pm AEST to discuss mortgages and rates.

or their Facebook page: www.facebook.com/ratecity.

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