It would, therefore make sense to go in for a fixed rate product only if you think the interest rates in the economy are bound to go up over the next few years. Even in this case, if the spread between the fixed and floating rates is fairly high, floating rate options continue to be better. For e.g. if the rate on fixed and floating rate products is 12.5% and 10% respectively, then as long as the increase in base rates is lower than 2.5%, floating rate products continue to be cheaper.
You may also want to check the terms and conditions associated with a fixed rate product. At times, the fixed rate is applicable only for a limited number of years, which in any case will defeat any assumption of certainty that you may want to build into your financial planning.
The choice on this one is not really easy. Fixed interest rate products are usually 1-3% higher than floating interest rate products but bring a certain level of certainty to your financial planning since you are more or less certain of your monthly outgo. On the other hand, floating interest rate products, though cheaper are linked to a base rate or benchmark rate and can go up or down with a change in the base rate.
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