While the board of the Reserve Bank of Australia left the official cash rate alone at their last meeting
, lenders took little notice of their stagnation.
According to interest rate comparison portal, RateCity, lenders have continued to cut their fixed home loan rates out of cycle to record lows.
One-year fixed rates have fallen to 3.3%, a number never seen before, while longer-term fixed rates remain low too, with 3-year fixed rates starting at 3.99%.
According to RateCity financial analyst Peter Arnold, the cuts by lenders are being driven by competition.
“First, the cost of funding has reduced making it cheaper now for the banks to borrow money and, second, there is an expectation of further slowdown in the economy and a feeling that rates will drop lower still,” Arnold said.
“With these factors combined, we’ve seen the lenders able to get more aggressive in their marketing and offering these sharper deals.”
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According to RateCity, moving from the current average standard variable rate of 4.83% to a one-year fixed rate of 3.3% would shave $265 off the monthly repayment on a $300,000 home loan.
Switching to the lowest three-year fixed rate of 3.99% would cut monthly repayments by $148.
While there are savings available, only those who sho some initiative will benefit.
“We’re not seeing much in the way of cuts to normal variable rates, so borrowers can’t just sit there and expect their repayments to come down. If you want a hot deal, you’ll need to take some action to get it,” Arnold said.
“My tip is if your home loan rate starts with a 4 then get out there and find a better rate – 3.99 percent is a sharp rate and gives consumers a great amount of certainty over a long period of time and there are plenty of shorter term fixed rates and variable rates below that.”
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