Lenders are currently reducing their fixed rates while simultaneously increasing variable loan rates in anticipation of an upcoming cash rate cut. However, experts caution that those enticed by the lower fixed rates may experience a financial “rollercoaster” if they choose to secure one of these loans.
A recent analysis by finance group Mozo revealed that several lenders raised their variable rates over the past two months while slashing fixed rates. For example, AMP Bank, Bank Australia, and Bank of Queensland decreased fixed rates, while Bendigo Bank, Beyond Bank, MyState Bank, and Great Southern Bank also lowered fixed rates.
Smaller lenders like Macquarie and HSBC joined the trend, reducing their fixed rates. This shift in fixed rates coincides with independent increases in variable rates by various banks, such as ANZ, Australian Mutual Bank, Auswide Bank, ING, P&N Bank, Unloan, and Up.
Furthermore, four banks removed cashback offers from the market during this period, signalling changes in the lending landscape. As lenders adjust their rates, experts suggest that borrowers carefully evaluate their options and consider both fixed and variable home loans.
Mozo’s personal finance expert, Rachel Wastell, suggests that these changes, coupled with lower inflation figures, indicate that banks expect the Reserve Bank to lower interest rates later in the year. There is a sense of confidence among banks that the aggressive hiking cycle may have come to an end.
However, experts warn borrowers to exercise caution, emphasising the need for thorough research and careful consideration before committing to lower fixed rates. The dynamic nature of interest rates and economic conditions adds an element of uncertainty to the decision-making process. As banks adjust their rates, borrowers are urged to assess their own financial stability and long-term goals.
In conclusion, while fixed rates may offer stability in repayments, borrowers are advised to navigate these changes with caution, considering the potential impact of future cash rate cuts on their chosen loan structure. For enquiries and personalised advice, contact us at Earth Property Buyers Agents:
Call: +61 418 797 701 Email: katie@earthproperty.com.au
