Fixed home loan rates set to be trimmed even further

Another round of fixed rate cuts looks likely with, St George tweeting that it will soon release “very competitive 2 and 3 Year Fixed Rates”.

Another round of fixed rate cuts looks likely with, St George tweeting that it will soon release “very competitive 2 and 3 Year Fixed Rates”.

The bank last cut its fixed rates at the end of September, reducing its three-year fixed-home loan rate by 0.15 points to 6.39% per annum as well as trimming its two-year fixed home loan rate by 0.05 points to 6.39% for its Advantage Package customers. Its basic two-year and three-year fixed rate loans carry a rate of 6.54%.

Expectations of more fixed-rate cuts follows the Reserve Bank’s decision to cut the official cash rate to 4.5% in November. Most lenders passed on the full 25-basis-point cut to variable-rate customers.

Major lenders such as Westpac believer a further 75 basis points will be trimmed off the official cash rate over the next 12 months, meaning lenders will have to continue to cut fixed rates to entice borrowers to opt for fixed products.

According to financial products comparison website RateCity.com.au, the average three-year fixed rate is now 6.61% compared with 7.43% at the start of the year.

Non-bank lender Homestar Finance currently offers the cheapest fixed-rate mortgage according to RateCity, with a three-year fixed loan at 6.15%.

The cheapest variable rate advertised on RateCity.com.au is 6.38% being offered by online lender Loans.com.au while the cheapest of the big four banks is NAB, which offers its standard variable mortgage at 7.47%.

Since the first of August this year, 90% of mortgage lenders have lowered some of their fixed rates, with some cutting fixed rate home loans by as much as 140 basis points in that time.

The Commonwealth Bank was one of 36 lenders that cut their fixed rates in October.

The Commonwealth Bank cut its five-year fixed rate by 85 basis points to 6.89% in October, the biggest fixed-rate cut of all the major banks.

All the major banks have cut their fixed rates by at least 50 basis points for spring, according to the mortgage comparison website.