Fixed rates at lowest level in three years

Fixed rates at lowest level in three years

Posted on Thursday, August 23 2012 at 4:31 PM

Competition between lenders for a slice of the fixed home loan market continues to heat up, with new research showing rates are at their lowest point since the global financial crisis (GFC).

An analysis by financial comparison firm
RateCity found 46 different lenders have dropped their three-year fixed loan
rates since July – including the big four banks.

The average reduction was nine basis points
but several slashed their fixed rates by between 30 and 40 basis points.

Michelle Hutchison from RateCity says some
fixed loans are becoming pretty hard to resist.

“Three-year fixed home loans, which is the
most popular term among borrowers, currently average 5.95 per cent,” Hutchison

There are other deals as low as 5.5 per
cent, she says.

“We haven’t seen three-year fixed rates
this low in more than three years, when we were hit by the GFC.”

While variable home loans are still the
popular choice among borrowers, she expects the take-up of fixed rates to
increased over the coming year.

“(There’s) uncertainty about which
direction official rates will move, (so) we expect to see more borrowers taking
up fixed home loans.”

According to the Australian Bureau of
Statistics, fixed home loans finance in June accounted for just over 10 per
cent of all mortgages. That represents an increase from 6.9 per cent in the
same period last year.

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