Slashed rates prompt warning
Industry analysts are warning borrowers against locking into fixed home loan rates as lenders slash their rates. Westpac has joined the ANZ, the Commonwealth Bank and a number of non-bank lenders by cutting its fixed rate home loans by up to 0.76 per cent. Westpac brought its five-year fixed home-loan rate down to 5.99 per cent from 6.49 per cent in line with the CBA. Westpac's 10-year rate has fallen to 6.99 per cent from 7.75 per cent and its one-year fixed-interest rate has been cut to 5.85 per cent. NAB has cut its one-year rate to 5.75 and its three-year to 5.85 per cent. One-year rates are currently as low as 4.99 per cent from AMP.
The average standard variable rate is currently 6.55 per cent compared with the average three-year fixed rate of 6.1 per cent, according to Infochoice. But it cautions that fixed-rate loans don't allow flexibility in repayments and may also incur more costs. Infochoice CEO Lisa Montgomery advised borrowers against rushing to lock in rates as variable rates may soon fall and fixed rates may fall further. She said a good option is for borrowers to split their loans and fix part of them at low rates if they're looking for some security, particularly people with large mortgages.
Compare fixed and variable rates