For the seventh consecutive month the Reserve Bank of Australia (RBA) has left the cash rate at 2.50 per cent. However this hasn’t stopped a major bank from dropping their rates to a 20-year low.
Loan Market director Mark De Martino said that the prolonged period of interest rate stability has helped homeowner and buyer confidence and was causing lenders to compete with one another with record low interest rates.
“In the past several months, homeowners have enjoyed the lowest cash rate of this generation and with lenders now dropping fixed interest rate to 20 year lows, there’s no reason confidence shouldn’t continue to build for homeowners and buyers,” Mr De Martino said.
The 20-year low interest rate by one of the major banks on its two year fixed interest rate product, indicates some analysts predict the next rate cut will be down.
“Fixed rate products are adjusted independently of the RBA cash rate decisions but are influenced by its predicted movements. The fact that this announcement was made just before the March RBA announcement, shows how confident some lenders are that rates will eventually drop again,” Mr De Martino said.
Mr De Martino said that buyers who were considering fixing their interest rate should consider their own appetite for risk and what repayment certainly means for them.
“With fixed rates being lower that variable ones for so long, this product type has got more attention than ever. Buyers and homeowners just need to be aware variable rates could drop to lower levels and could miss out on savings.”
“The best place to go to see which lenders are making the right competitive moves is your local mortgage broker – they also know the lenders competing in other areas such as cash back rebates and waiving fees,” Mr De Martino said.
Mr De Martino said that enquiries for fixed rates have remained high at Loan Market, accounting for 37 per cent of all enquiries this year at Loan Market, compared to 24 per cent last year.
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