Lenders rush to drop fixed rates in last fortnight

Lenders are bucking the rate hike trend and slashing their popular fixed home loan rates – making the option to switch to fixed more attractive.

Research from financial comparison site, RateCity.com.au, shows that 11 lenders – including several major banks – have cut their 3-year fixed home loan rates in the past fortnight.interest rates

Sally Tindall, money editor at RateCity, said the window to fix near the bottom of the rate cycle was becoming clearer, despite the RBA’s suggestion that a cut might be on the cards next year.

“Home loan rates are at 60-year lows and, with this latest round of fixed rate cuts, the argument for fixing is stronger than ever,”

“There are 142 mortgages with a rate under 4.5 per cent, and 11 under 4 per cent, fixed until Christmas 2018.”

Yet,analysis of ABS housing finance data shows that few borrowers are taking up these hot rates with just one in 10 new home loans taken out now being fixed.

Sally Tindall commented:

 “Historically, Australians have missed the boat when it comes to fixing, with many tending to ‘panic fix’ when rates were highest.

“For example, when the cash rate peaked at 7.25 per cent in March 2008, more than a quarter of new loans were fixed.

“By comparison, when rates plummeted to 3 per cent the following year people shied away from fixing and as few as 4 per cent of new loans settled were fixed.

“We’re now in one of those windows when rates are low, and while we might be looking down the barrel of another rate cut, it wouldn’t be the silliest time to fix.”

“The peace of mind a fixed loan brings may be what some Australians are looking for in this time of historic low rates.

“Of course, no one has a crystal ball, so you do have make that tough decision as to whether you’ll be better off on a variable rate or a fixed rate over the next three years,” she said.

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Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au

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