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ISCOVER
Staff Reporter
Demand for fixed rates is on the rise again, according to new research by Loan Market.
Company spokesperson Paul Smith said that since the Reserve Bank of Australia’s (RBA’s) May rate cut, 40 per cent of homeowner enquires have been about fixing the borrower’s interest rate, the highest proportion since the start of 2013.
“There’s been a roller coaster of speculation [about] when we’ll hit the bottom of the interest rate cycle and the latest RBA rate cut has caused lenders to drop their fixed rates even further as they expect the cash rate to drop again,” Mr Smith said.
Interestingly, he added, the past two weeks have seen lenders moving the pricing of their three-year fixed rates more than their two-year rates.
“As lenders speculate where variable rates will bottom out, they’re going to find ways to attract and retain customers – fixed rate products are so competitive right now for this reason,” he said.
According to Mr Smith, it is important for a borrower to consider the longer term implications of signing up for a fixed or variable rate and not to make a decision based on the interest rate alone.
“Fixed rates continue to be priced below variable rates and have been so for nearly 12 months now. It’s a trend that’s against the historical comparison of fixed and variable rates, which further adds to the unique situation interest rates are presently in,” he said.
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