Fixed rates on home loans begin to crumble.
Article by Kevin Boyle
Australia's banks are going head to head with cuts to fixed interest rates on home loans in a bid to capture a declining market.
Westpac have cut their fixed rates to 4.99 percent on a 2 year package, their lowest level since April 2009. And the move is sparking an all out war amongst the banks with St.George, ANZ, Commonwealth Bank and RAMS all introducing cuts to their fixed interest rate packages.
Fixed interest rates were already at their lowest in over 2 decades at the end of January at 5.52 percent but despite the low, fixed loans are still struggling in popularity, with only 14 percent of recent home loans last year taken on fixed rates, reported the International Herald Tribune.
The Australian Bureau of Statistics says that the number of home loans overall taken out in December dropped by 1.5 percent, for the third consecutive month, further increasing competition amongst the banks. This is despite the RBA slashing interest rates to 3.00 percent in an attempt to stimulate the housing market.
"First-home buyers need to know that rates are going to stay down for them to have the confidence to jump into the market," said Brian Redican, a senior economist at Macqaurie.
The cuts however are a clear sign that the banks expect a further fall in variable rates in the upcoming months.
The International Herald Tribune also stated that the average standard variable rate is around 6.44 percent but with a few phone calls to banks, or the use of a home loan negotiator, borrowers could find discounts from 0.75 up to 1 percent on their home loan.
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