Home News Banks flood the market with fixed rate home loans

Banks flood the market with fixed rate home loans

Font size :

More than 30 lenders have launched 115 three-year fixed rate home loans to boost property demand that slumped due to subdued demand from overseas and first home buyers.

The number fixed rate loans launched within the past month is nearly four times as many as variable rate launches in spite of the prospect of more base rate cuts in the near future. In fact, more fixed rate offerings are expected in the coming weeks as bank borrowing costs remain at 1.6 per cent, enabling them to lock in on big margins.

According to some lenders, they are being overwhelmed by lender applications, leading them to hire more staff for processing and increasing overtime. Some of these lenders are being closely watched by the Australian Prudential Regulation Authority due to chronic servicing delays caused by computer problems.

“There is intense competition in a market where mortgage flows are slowing,” said Martin North, principal of research firm Digital Finance Analytics. “Refinancing and investment lending are the targets.”

According to an analysis by the Reserve Bank, more than one in four mortgages held by lenders have been refinanced in the past 12 months, meaning investment lending is growing faster than owner-occupied lending. Nearly three times as many lenders have moved to cut three-year rates than five years, as analysts regard three years as ‘the sweet spot.’ The average three-year interest rate is about 4.21 per cent, compared to 4.28 per cent for one-year fixed rates.

“The market is pricing in an additional cut--or cuts-- to the cash rate as reflected in the yield curve,” said John Flavell, chief executive of Mortgage Choice. “Overall expectations are for lower cash rates for longer in Australia and globally.”

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

Many millennials are relying on an inheritance to buy homes Many millennials are relying on an inheritance to buy homes

Lawyers are seeing cases where disputes over inheritance have created tensions within families Read more

Gen Y homeowners fearful of interest rate rises Gen Y homeowners fearful of interest rate rises Many are worried rising interest rates will negatively impact their cost of living expenses, according to a new survey ... Read more

Young Sydneysiders are less keen on homeownership Young Sydneysiders are less keen on homeownership Many would rather ‘rentvest’ than be tied down to a costly owner-occupier mortgage, according to new studies ... Read more

New social housing aims to transform Ivanhoe Estate New social housing aims to transform Ivanhoe Estate The sprawling redevelopment aims to boost the supply of affordable housing in Sydney ... Read more

More mortgage news and articles

Sponsored Links

Thursday, Aug 24, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords