Two of the Big Four banks have slashed their fixed home loan rates, sparking speculation that the banks are trying to tie home owners into a fixed deal before the RBA drops the official cash rate.
Commonwealth Bank has slashed the rate on its fixed rate products by up to 0.6%, a move that the bank claims will mean that its one- to five-year fixed products will offer the lowest rates across all banks.
The bank's one-, two- and three-year fixed loans all now offer a rate of 6.59%, while its four- and five-year fixed loans will now charge a rate of 6.99%.
“Many customers want certainty with their home loan repayments and we are pleased to take a lead and offer customers that peace of mind," says Commonwealth Bank's group executive, retail banking services, Ross McEwan.
Westpac has followed suit by dropping the rate on its three-year fixed Premier Advantage Package product by 0.2% to 6.79%.
And it seems that discount fever is also spreading to the smaller banks, with ING DIRECT announcing that its fixed rate loans will be reduced to 6.59% for one-year, 6.69% for three-year and 6.99% for five-year loans.
“There is an air of uncertainty among borrowers, and we’ve seen an increased appetite for discounted fixed rates in the past few months as borrowers capitalise on the ability to effectively take an immediate rate cut,” says ING DIRECT’s head of broker sales Mark Woolnough.
“The benefit of a fixed rate is the certainty of a good, low rate for the medium term and the option to move to another competitive loan once that term expires.”
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