Login
ISCOVER
Staff Reporter
Three year fixed rates are now sitting at their lowest level in two years, which could encourage many borrowers to fix their mortgage, RateCity has claimed.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
According to new data by RateCity, the average three year fixed rate is now just 7.38 per cent – 8 basis points above the current average standard variable rate of 7.30 per cent.
Even more significantly, 36 lenders now offer three-year fixed rates below that variable average.
RateCity’s chief executive officer Damian Smith said lenders are offering attractive fixed rate home loan deals to help kick-start lending but also to retain current customers with longer-term deals as exit fees on variable rate loans are banned.
“Lenders are clearly competing harder with their fixed rate deals at the moment, despite a general consensus that interest rates will rise in the coming months,” he said.
“The ban on excessive early fees does not include break costs for fixed rate home loans so it’s a better deal for lenders to increase their customer base for fixed loans while borrowers could save on interest. For instance, we’ve found three-year fixed rates as low as 7.14 per cent which is better than most standard variable rates currently on offer.
“The current average standard variable rate is 7.30 per cent so if variable rates rise by 50 basis points in six months’ time, borrowers could potentially save $2,500 on a $300,000 mortgage in three years.”
It seems the attractiveness of fixed rates has already lured some borrowers, with Mortgage Choice data showing a significant increase in the number of fixed mortgage rate applications.
Earlier this week, the brokerage reported that the popularity of fixed rates hit their highest level in June, reaching 12.3 per cent.
