Login
ISCOVER
Staff Reporter
Fixed rates are set to come back en vogue as more lenders hike their standard variable rates.
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 data from RateCity, 12 lenders have now increased the interest on their standard variable rates.
“We won’t see the full impact of these rate hikes until this week when they will take effect, but the uncertainty of which direction home loan rates will go this year has caused many borrowers to fix their home loan,” RateCity chief executive Damian Smith said.
“Lower fixed rates are attracting record numbers of borrowers to lock in their home loan. New figures from Australian Bureau of Statistics (ABS) and analysed by RateCity show there were almost 6,000 fixed home loans taken out in December 2011, which is almost 12 percent of all home loans financed. We haven’t seen this large a proportion of fixed home loans since June 2008.
“The major banks’ average three-year fixed rate is 6.38 per cent – which hasn’t been this low since June 2009. It’s also unusual to see fixed rates lower than variable rates. When the major banks offered three-year rates this low in June 2009, their standard variable rates were still lower.”
Mr Smith said the fact that fixed rates continue to fall while SVRs climb slightly higher could encourage a lot more borrowers to fix over the coming few months.
Smartline’s managing director Chris Acret agreed and said as fixed rates are currently 0.5 per cent lower than the average standard variable rate, more home owners would start to view fixed rates as an attractive option.
“When you look at an interest rate of, say, 5.99 per cent compared with the average basic variable interest rate over the last decade of approximately 7.1 per cent,” he said.
“In that context, an interest rate below or around 6% may well be worth taking advantage of.”
