Banks are now offering some of the lowest fixed mortgage interest rates ever, with some dipping below 3 per cent.
Smaller banks like St George, Bank of Melbourne and BankSA have all cut their fixed home loan rates to below 3 per cent and it gives an indication they expect the official cash rate to keep falling.
The cuts come just before the spring selling season hits and it could see a big return to the market for buyers who have largely been missing during a two-year slump.
At St George and Bank of Melbourne, if you’re a borrower with a loan-to-value ratio between 60-80 per cent and are an owner-occupier, you can get a fixed rate of 2.99 per cent and if you’re LVR is 60 per cent or less you can get a rate of 2.94 per cent.
For those borrowers who can’t get that LVR down below the 80 per cent mark, they are still having to pay a fixed rate of 3.04 per cent.
Canstar’s finance expert Steve Mickenbecker spoke to The Australian about the rates.
“These are market-leading rates over four and five years,” he said.
“It’s a strong statement. Longer term bond rates keep falling and it’s given the banks a fair bit of room to play with margins.”
“And of course if you do it on fixed rates rather than across the existing home loan book, you’re just doing it on the new business you write.”
“Westpac itself hasn’t moved to this degree, so you’d have to suspect they’re pushing hard for new business with the subsidiaries, but maybe they aren’t prepared to take the hit on the major brand,” he said.
RateCity research director Sally Tindall said the RBA was likely to cut rates again and lenders are likely to pass some of that onto their variable home loans.
“The banks are falling over each other to claim the title of having the lowest fixed rate on the market,” she told The Australian.
“It’s unusual to see some of the largest banks offering some of the lowest fixed rates in the country.”
The RBA cut its official cash rate to 1 per cent recently and has indicated a long period of low interest rates could be on the cards.