Fixed-rate mortgage discounts diminishing as variable rates play catch-up: RateCity

The discount on the standard variable rate that lenders have been willing to offer borrowers to entice them to fix their home loans has been shrinking since the RBA began cutting rates in November last year, according to figures compiled by RateCity.com.au. 

Based on analysis of 120 lenders in the RateCity.com.au database, the data shows that the gap between the benchmark three-year fixed rate and benchmark standard variable rate has shrunk from 74 basis points to 47 basis points – and is likely to fall further when the latest cash rate cut is passed on in part by lenders.

Click to enlarge

Source: RateCity.com.au

It could fall even further if predictions by Westpac chief economist Bill Evans that fixed rates will start to rise prove accurate. 

As of June 1, the average standard variable rate was 6.59%, compared with 6.12% for the average three-year fixed rate, according to RateCity.com.au. 

Fixed rates have, on average, been cheaper than standard variable rates since the middle of last year, but the frequency of lenders reducing their fixed rates has slowed since the start of the year.

They remain popular relative to recent historic demand, but have fallen from their peaks of a few months back, May mortgage processing figures recently released by Mortgage Choice and AFG revealed.

 

Average Home Loan Rates

Standard Variable

3y Fixed

Difference

1-Nov-11

7.31%

6.57%

0.74

1-Dec-11

7.08%

6.41%

0.67

1-Jan-12

6.84%

6.26%

0.58

1-Feb-12

6.82%

6.26%

0.56

1-Mar-12

6.86%

6.27%

0.59

1-Apr-12

6.86%

6.35%

0.51

1-May-12

6.87%

6.34%

0.53

1-Jun-12

6.59%

6.12%

0.47

Source: www.ratecity.com.au

 

 

Currently, the Greater Building Society is offering the cheapest three-year fixed rate of 5.79% with seven lenders – ING Direct, ME Bank, CUA and Aussie, Citibank, IMB Building Society – offering a rate of 5.99%. 

RateCity.com.au top variable home loans as of June 5, 2012 are:

  1. UBank, UHomeLoan – 5.83%
  2. Loans.com.au, Dream Catcher – 5.85%
  3. Bank MECU, Refinance – 5.94%
  4. State Custodians, Standard Variable Offset – 6.02%
  5. IMB, Budget Home Loan – 6.04%

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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