Sometimes the opportunities are fleeting, with cheap fixed four- and five-year mortgage rates now falling into this category.
Although it is still possible to get very cheap offers over two and three years, the door has been closed for the big four banks offering longer fixed rates at less than 2%.
Even among the smallest lenders, these deals are quickly fading as the focus shifts to two- and three-year rates, which have now taken over from the cheapest in the market.
Floating rates are falling
Prices for variable rate loans have also fallen, tempting borrowers and refinancers, with some of the cheapest rates now falling in what was previously fixed rate territory of around 2.3%.
The changes come despite the fact that the Reserve Bank’s 0.1% cash rate has not changed, but rather reflects changes in what is happening in the money markets as the trader’s price in the rate of Interest is rising as the economy continues to recover sharply.
This means that long term fixed rates go up even though shorter term loans continue to offer very low rates.
Variable rates are also lower because they offer the upside protection that they can be increased as circumstances change.
Three-year fixed rate loans could be the next to increase
It’s not too hard to see where this is heading, with three-year fixed rate loans likely being the next category to start rising as we move forward this year.
Some experts predict hikes in the three-year rate as early as the second half of the year.
Macquarie Bank is a good example of this effect, having raised the rate on its four- and five-year fixed loans up to 0.30% for homeowners and investors while lowering its variable rates for homeowners and investors. investors up to 0.40%.
Variable loans at the lowest rates ever
According to comparison website Mozo, variable interest rates and average variable interest rates for homeowners are now around 3.26%, hitting 3.66% for investors – the lowest points since they started following them in 2015.
Two- and three-year fixed loans remain very popular with borrowers, and this trend is likely to increase now that cheap four- and five-year fixed rates have effectively left the bar.
Variable rate loans are also proving popular because they have come down a lot and can be used without having to refinance a few years down the road, although they obviously have the downside of being sensitive to rate hikes along the way.
Bank mortgage services are flat
The changing composition of home loan offerings comes as virtually all financial institutions break new loan underwriting records as the housing boom and refinancings increase volumes.
The latest figures from the Australian Bureau of Statistics (ABS) showed that $ 22.6 billion in home loans were refinanced in March, a 21% increase from February’s refinancing figure of $ 18.8 billion. .
Of that total, $ 15.1 billion was from homeowners and $ 7.5 billion was from investors, both up substantially from previous months as customers refinance and new loans are taken out.
ABS figures also showed that new mortgage commitments reached over $ 30 billion in March, a new record.