Falling rates trigger fixed-rate loan war
Fixed interest rates are continuing to fall sharply with non-bank lender RESI Mortgage Corporation leading a charge to undercut the major banks to a point where investors can now lock in for up to five years at well below the standard variable rate of 6.32 per cent.
RESI currently offers a two-year fixed rate of 5.23 per cent, 5.47 per cent for three years, 5.70 per cent for four years and 5.91 per cent for five years. There are eight different lenders which now offer a 3-year fixed rate below 6 per cent, including Mortgage House, Victorian Teachers' CU, AMP Banking and Super Members Home Loans.
Despite deregulation opening up the home lending market over the last decade, the major banks had remained the most competitive on home loan fixed rates. But this has all changed in recent months as the non-banks adjust strategy in the face of heavy competition on variable rates.
The freefalling interest rate climate has played its part, bringing opportunities to source ever cheaper fixed-rate funds.
Now a Melbourne Cup-sized field of more than 20 lenders have 3-year fixed rates between 6 per cent and 6.31 per cent, with ANZ and NAB placed in the middle of the pack. RESI is one of three lenders with a 5-year fixed rate of 6.32 per cent or lower.
Fixed rate loans only suit some borrowers. Read more about the the choice between fixed and variable rate loans.
View a summary of fixed and variable rates in your state.