It is an “opportune time” for brokers to help clients consider fixing all or part of their loan, according to a rate comparison site expert.
The reserve bank of Australia (RBA) held the cash rate yesterday (4 September), but lenders are still expected to continue increasing rates.
Last week, Westpac became the first of the big four to increase variable home loan interest rates, despite two years of cash rate stability.
Steve Mickenbecker, Canstar group executive, financial services, said, “With one of the major banks joining the group of lenders putting their variable rates up, borrowers must be starting to fear a return to the days of monthly rate increases. This may be quite some time off, as the RBA is clearly not ready for that regime yet. However, further increases look inevitable.”
According to Canstar’s latest research, based on a $400,000 loan over 25 years the difference between the highest interest rate available and the lowest is $327 per month, or $4000 per year.
Throughout August the site saw 43% of banks and lenders cut rates, while 23% hiked them and the remaining 33% did a combination of both.
Mickenbecker said fixed rates were not being affected the same as variable rates were.
He added, “This spring campaign, lenders are leading with their fixed rate products. As variable rates are rising, fixed rates are being reduced to keep fresh rates in the market. August saw 103 fixed rate decreases, compared to only seven fixed rate increases.
“It’s an opportune time for brokers to be reaching out to clients to discuss the consideration of fixing all or part of their loan. Of the 717 loans with a rate below 4%, 390 are fixed rate loans. Locking into a rate below 4% for a few years can give a surety of repayment at rates that are close to historic lows.
“As always, there is a huge range in pricing. Canstar’s website displays a range from 3.49% to 4.95% for 2-year fixed rate loans for owner occupiers, with potential for monthly repayment savings of $327.”
