Large lenders cut fixed rates despite Reserve Bank of Australia rate hikes
In the past week, eight lenders in the RateCity database have lowered at least one fixed rate.
These include Westpac, CBA, Firstmac, Loans.com.au, Macquarie Bank, Suncorp, Homestar Finance Investment Loans and Athena Home Loans.
Millions of borrowers were tempted by ultra-low fixed interest rates, most of which stuck at or below 2 percent after national interest rates rose.
For Shelley Fitzerald, repairing her loan over the past year seemed like the best option to hedge against rising interest rates.
“I think I’ll just look at that next year. At least that way I know exactly what I owe in repayments through next year,” she said.
But the majority of those loans will expire mid to late next year, which could expose borrowers to a new loan rate that could be double or even triple what they’re paying now.
According to online home loan marketplace Joust, variable-rate loans are making a comeback as fixed rates soar.
“We have seen in the last 12 months that the number of customers specifically looking for a fixed-rate mortgage has almost halved,” said Joust Managing Director Carl Hammerschmidt.
“Because financing costs for fixed-rate mortgages have come down,” said Shane Oliver, chief economist at AMP Capital.
Now borrowers face a big gamble – will they fix interest rates again or roll the dice at the floating rate?
“Whether you’re fixed or floating is a tough decision,” said RateCity’s Sally Tindall.
“But the only thing people should be doing is looking for a competitive deal.”
After four recent official rate hikes, some economists are now forecasting rate cuts next year.
Of the big banks, the Commonwealth Bank has the most optimistic outlook, believing interest rates will be 2.60 percent by November before falling to 2.10 percent by the same month next year.
ANZ has the most negative outlook as rates rise to 3.35 percent by November before falling to 2.85 percent by the end of 2024.
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