This week I have received two notifications from several lending institutions, advising they would be decreasing their fixed rate home loans across their one to five year range . Here are the rate adjustments for one of those lender’s packaged home loan rates for owner occupiers that applied on and from 24th Jan 2024 :-
Fixed Term Current Rate Decrease New Rate
1 year 6.79% -.40% 6.39%
2 years 6.49% -.40% 6.09%
3 years 6.29% -.30% 5.99%
4 years 6.44% -.25% 6.19%
5 years 6.44% -.15% 6.29%
There are a few important points to note about the above :-
When lenders start decreasing their fixed rate loans , they are factoring in the financial market expectation that economic growth will slow , perhaps contract , and therefore variable interest rates will quite possibly fall.
Where are variable home loan rates sitting at present ? It is possible to obtain a variable owner occupied home loan rate at just under 6% at present. So looking at the above table , that’s about on par with the (3) year fixed rate .
Rates appear to have reached their peak in the current rising cycle supported by economic data , inflation easing , weaker jobs growth , declining household spending . Worldwide, major economies , Germany , UK , USA as examples, are also struggling with growth and cost of living pressures for their citizens, regardless of easing inflation.
In reality unless you were currently experiencing difficulty with your cash flows you would be well advised to sit and ‘watch this space’, as we will quite likely see two or more variable interest rate reductions this year in an effort to try and support economic growth . Amid those variable rate falls we may quite likely see further reductions in fixed interest rates , and it’s then that you might consider further, as to accepting a lower fixed rate on offer? Having a known weekly / fortnightly fixed loan repayment brings some certainty for cash flows.
Call Michael on 02 6583 2211 if you have any questions.