Fixed-rage mortgages could get even cheaper: Ross Greenwood

Borrowers might consider holding off taking out fixed-rate mortgages as further cuts may be in the pipeline, according to Channel 9 finance expert Ross Greenwood.

Speaking during his regular Today Show segment, he said fixed-rate mortgages could get even cheaper.

According to Greenwood there is probably a window of opportunity between now and the end of the year to lock in at cheaper fixed rates and it may not be today.

He says banks have access to cheaper funding and are able to pass this on to borrowers.

Mortgage broker The Loan Market Group says enquiries for fixed-rate loans have increased to 30% of all enquiries from virtually “non-existent” levels at the start of the year.

Loan Market chief operating officer Dean Rushton tells Property Observer it is seeing “lenders acting quite aggressively with fixed rates”.

“It’s basically routine now to see a new weekly leader in fixed rate pricing. It will likely remain a competitive product for the next several months as the banks seem to be determined to battle it out in this space,” Rushton says.

“With the prospect of a rate rise still a few months away we’ll continue to see the major banks competing for fixed rate products.”

Yesterday Westpac cut its one- and three-year fixed-rate mortgages, a day after the Greater Building Society cut its fixed rates under those of some of the major banks.

Westpac is offering a three-year fixed-rate mortgage rate of 6.44% while the Greater is offering a rate of 6.35%.

Currently the cheapest three-year fixed- and variable-rate mortgages as listed by mortgage comparison website RateCity.com.au are:

Three-year fixed rate		Variable
AMP	6.29%	Illawarra Home Loans	6.68%
ME Bank	6.35%	Loans.com.au	6.69%
ECU Australia	6.35%	Newcastle Permanent	6.74%

Source RateCity.com.au

Mortgage broker Mortgage Choice says there has been a significant increase in the percentage borrowers taking out fixed-rate mortgages, with the proportion rising from 3.67% in September 2010 to just over 14% in August.

Spokeswoman Kristy Sheppard says every interest rate reduction brought out by a major bank puts pressure on the other lenders to re-examine their rates.

“I hope rates continue falling to historic lows, for borrowers' sakes. We'll simply have to wait and see if this happens,” she says.

Fixed-rate loans as a % of our new loan approvals

Source: Mortgage Choice

According to mortgage comparison website RateCity.com.au, about 70% of lenders have cut their fixed rates recently.