Citibank slashes 3year fixed rate to 5.94 per cent

02/12/2011

Proving fixed rates are still incredibly competitive, one of Australia's non-majors has slashed more than 130 basis points from its three year fixed rate home loan. Yesterday, Citibank announced it would cut the rate on its three year fixed rate yet again, taking the new home loan to just 5.94 per cent.

Since July this year, the lender has shaved 138 basis points from this particular product. Speaking about the rate cut, Citibank's head of mortgages Vibha Coburn said a rare inverse in the yield curve had enabled the lender to drastically reduce its fixed rate products.

"Inverse yield curves, where the longer term rates are lower than the short term rates, are rare phenomena, but provide mortgage customers with the opportunity to lock in fixed rates lower than variable rates," Ms Coburn said.

According to Ms Coburn, the current situation with the yield curve has only ever happened three times, in the early 90s, during the GFC and now. "Even if the RBA cuts rates next Tuesday and beyond, no-one is expecting a cut of the magnitude we've seen in fixed rates. If you are trying to budget and want more certainty in your finances, then it would make sense to consider fixing rates for 12, 24 or even 36 months," she said.

Source: The Advisor