Lenders continue to cut fixed rates
Westpac, AMP and ING Direct are among a number of lenders that have lowered their fixed interest rates in the last month.
The moves downward come as more borrowers opt to fix their repayments in anticipation of future rate rises.
The RBA is expected to keep rates on hold at its July 5 monetary policy meeting.
According to Mortgage Choice, the popularity of fixed interest rate home loans hit their highest level in five months in June, reaching 12.3% of all approvals, compared to 11.6% in May and a one-year moving average of 9.5%.
Constant speculation about interest rate rises in the latter half of 2011 and beyond may have convinced a higher number of borrowers to lock in their rate “rather than feel their stomach churn with each piece of speculation,” according to Mortgage Choice.
Every state apart from SA saw a rise in popularity for fixed rate loans. The largest increase in interest came from WA, where demand rose from 9.4% in May to 14.2% in June.
There is now only one tenth of a percentage point difference between the average three-year fixed rate – traditionally the most popular fixed rate product – and the average basic variable rate.
Newcastle Permanent Building Society has made the most recent changes to fixed rates loan.
From July 4, its two-year fixed rate loan reduces from 7.19% to 7.09% and its four-year fixed rate loan drops from 7.69% to 7.59%.
On June 27, Westpac cut rates on nine out of ten of its fixed rate products, the biggest cut coming to its two-year fixed rate mortgage which reduced from 7.39% to 7.29%.
The Commonwealth Bank has also cut rates on a variable rate mortgage, announcing on June 24 it had reduced the interest rate on its no-fee variable interest rate home loan by 13 basis points to 7.11%.
Ongoing discount loans remain the most popular choice among borrowers (32%) followed by standard variable rate mortgage (25% of all loans) and basic variable mortgages (21%)
According to Mortgage Choice, a range of good ongoing discount rate home loan deals still available to borrowers account for overriding popularity of that product type.