Fixed rates edging down
The latest round of interest rate adjustments from home lenders shows fixed loan rates edging downwards, especially for the longer five-year fixed terms.
While this appears to be good news for borrowers, the changes sound a warning for those currently considering taking out a fixed rate loan. The falls signal that lenders think we are very near the top of the interest rate cycle and that variable rates are going to move lower over the medium term.
While all the talk is of the Reserve Bank raising official interest rates, with higher variable home loan rates to follow, this may well be short-term with rates falling back over the next year or two. Locking into fixed rates at such a time is a questionable strategy, especially as far out as three to five years.
NAB has lowered a number of its five-year fixed rates by 0.3 percentage points while AXA Home Loans has lowered its 1,3 and 5 year fixed rates by around 0.1 percentage points.
NAB has also lowered the introductory rate on its Tailored Loan by 0.2 percentage points.