With the focus on rate rises, you might not have noticed that some lenders have reduced rates on fixed-rate loans.
Variable rates are likely to continue to rise in line with future Reserve Bank of Australia cash rate increases. These are all but guaranteed.
But some fixed loans have been coming down lately.
That’s because while lenders often take their cue from the RBA when setting variable interest rates. They tend to reference financial markets when setting fixed rates.
Markets had priced in RBA rate rises longer before they occurred. This is why lenders started increasing their fixed rates as early as December 2020.
Now, though, some lenders have concluded the RBA won’t increase the cash rate as much as they originally thought. Therefore, some lenders went a bit far with their fixed increases.
As a result, some lenders have reduced interest rates on their fixed loans — although they remain quite a bit higher than variable rates.
Interest rates can be confusing, but I can help make sense of it all for you. Contact me if you want to discuss whether it’s best to have a fixed loan, a variable loan or a split loan (which is part fixed and part variable) in this current environment.
