Fixed interest rates fall as banks battle for business
Almost 90 per cent of fixed rate home loans have fallen since 1 August, with some fixed rates now available under the 6 per cent mark, according to research by financial comparison website RateCity.
Thirty-six mortgage lenders moved rates down in October, with fixed rate loans now as low as 5.94 per cent. Meanwhile, some lenders have slashed fixed rate home loans by as much as 140 basis points since 1 August, the study found.
RateCity chief executive officer Damian Smith said the downward push on fixed interest rates reflected the ongoing battle between the major banks and lenders to attract and retain customers.
"The major four banks - ANZ, Commonwealth Bank, NAB and Westpac - have all slashed their fixed mortgage by at least 50 basis points for Spring," Smith said.
Of the big four, the biggest cut was made by Commonwealth, which slashed its 5-year fixed rate by 85 basis points to 6.89 per cent, Smith said.
The research also found that the average 3-year fixed rate - which RateCity stated was one of the most popular fixed rate options - fell an average of 66 basis points to 6.61 per cent since 1 August.
Longer-term fixed rates, such as 3- and 5-year term loans, have seen the majority of cuts in the last couple of months. However Smith said the catch was that fixed rates revert to a variable rate after the fixed period, which can cost more in the long run.
"The decision to fix part or all of your home loan can be a tricky one. We typically advocate that a good time to fix is when long-term fixed rates are less than 1 per cent higher than the standard variable rate," Smith said.
"At the moment average 3-year fixed rates are 0.7 per cent lower than the standard variable rate, so the window to fix is certainly open."
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