Once-upon-a-time we used to watch the Reserve Bank like a hawk; if it cut the cash rate, we would just wait for our bank to pass the rate cut on (or not)
Now the Reserve Bank is doing something completely different to keep home loan rates down (some as low as 1.99 per cent).
The Reserve Bank has offered the banks access to some $200 billion of three-year funds at the ultra-low rate of 0.25 per cent
And the banks are making good use of this cheap fixed-rate funding to offer appetising interest rates to new home buyers, and to people refinancing their loans. (Indeed, close to 40 per cent of total home loan approvals at present are to people refinancing their loans at a lower interest rate.)
Where these rates are really kicking-in is with fixed rates – many Australians are fixing their home loan for the next three years at interest rates close to 2 per cent.
In the case of the Commonwealth Bank, the country’s largest housing lender, roughly 40 per cent of new home loan approvals are fixed rate. This is a big jump on previous levels.
But some lenders are better with fixed rates than others.
If you want to talk about whether or how you should fix your loan, please contact your Origin broker on 1300 30 67 67.