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ISCOVER
Staff Reporter
Fixed rate reductions by Australia’s lenders have led to a surge in borrower interest for this type of home loan.
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Loan Market Group’s chief operating officer Dean Rushton said the group had seen a 15 per cent increase in enquiries from customers over the past few weeks.
Mr Rushton said some lenders were offering fixed rates as much as 1.5 per cent below the bank’s standard variable rate on the market.
“We haven’t seen a gap like this between fixed and variable rates in some time,” Mr Rushton said.
“Around the last RBA rate movement fixed rate products were sitting about 0.5 per cent higher than most variable rates, but now they are sitting up to 1.5 per cent below the banks standard variable for a typical 3 year fixed rate.
“In fact, during the initial months of the GFC, medium term (3-5 year) fixed rates stood almost 2 per cent above variable rates, which highlights the extraordinary position the market is in right now.”
Mr Rushton said lenders have been forecasting the RBA to lower official rates in the coming months in response to the volatile international economic climate and sluggish domestic consumer confidence.
“Their position with fixed rate products widely supports this,” he said.
Mr Rushton said borrowers still needed to ensure they were locking into a fixed rate for the right reasons, some of which included certainty of repayment and peace of mind rather than as a speculative play on where rates are going to move.
He said a large number of Australians committed to fixed rates just before the last GFC in 2008 and then watched as the RBA reduced the cash rate to a near record low of 3.0 per cent.
