Fixed-rate loans drop

South West Slopes Bank (SWSbank) has introduced the lowest fixed-rate home loan tracked by Mozo in over a year, offering a 4.99% p.a. rate (6.15% p.a. comparison rate*) for owner-occupiers looking to lock in their rate for three years.

The last time a rate this low was seen was in June 2023, when The Capricornian offered a similar 4.99% p.a. rate for a three-year term.

SWSbank beats the competition

SWSbank’s new offering outpaces the market by a significant margin, coming in 1.17% lower than the current average three-year fixed rate of 6.16% p.a.† in the Mozo database.

Until earlier this week, Police Credit Union held the title for the lowest three-year fixed rate at 5.49% p.a. (6.97% comparison rate*), but SWSbank’s offer beats that by an impressive 0.5%.

See LinkedIn post here.

Investors benefit from competitive rates

SWSbank isn’t leaving investors out, offering the same competitive 4.99% p.a. (6.36% comparison rate*) rate for its three-year fixed investor loan. This rate is 1.4% lower than the average fixed investor rate of 6.39% p.a.†† in Mozo’s database, making it an attractive option for property investors.

Rate cuts anticipated as inflation eases

In recent weeks, several lenders – including some of the big four banks – have been lowering their fixed rates in anticipation of a possible cut in the Reserve Bank’s (RBA) cash rate.

Commbank, Westpac, HSBC, and smaller lenders like MOVE Bank and Hume Bank have all reduced their fixed-rate offerings.

Inflation trends influence interest rates

The downward trend in inflation is driving these rate cuts.

The consumer price index (CPI) showed a 3.7% increase in headline inflation over the year to July, down from 4% in June. This brings inflation closer to the RBA's target range of 2%-3%, raising hopes for lower interest rates in the near future.

Fixed rates: The right move?

With lenders reducing fixed rates, now may be a good time to guide clients toward locking in a fixed home loan. However, possible cash rate cuts could lower variable rates, so it’s crucial to weigh both options before making a recommendation, Mozo said.

Additional market insights

• Average loan growth: The average fixed rate for owner-occupiers with less than 80% LVR is 6.16% p.a., and for investors, it's 6.39% p.a.
• Lender activity: Over the past month, major players like Commbank, Westpac, and smaller lenders have dropped their fixed rates in anticipation of lower interest rates.
• Inflation impact: As inflation slows down, with the CPI reaching 3.7% in July 2024, more rate cuts are expected as the RBA aims to return inflation to its target range.

Read the Mozo article here.

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