February 2009 Survey - Home loan rates: Where are they headed?

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We asked our panel of Australia's leading economists and mortgage industry experts to give their recommendations on where they think the average standard variable rate will be at the end of May 2009, and whether borrowers should consider fixing or staying variable.

After recent rate cuts by the Reserve Bank of Australia (RBA) and major lenders, we calculated an average standard variable rate of 5.82% as at February 2009. These predictions by no means reflect where the rates will be for the banks or other lending institutions surveyed, and are instead intended as a guide. Forecasts may have changed since the time of the survey, on 9 February 2009.

"Given the average standard variable mortgage rate is now around 5.82% and some lenders have recently spoken out to say they may not match future cash rate cuts, I think the average standard variable mortgage rate will hit 5% by the end of
May 2009. I don't think it will go much lower than the high 4% range by the end
of the year.
For borrowers looking for peace of mind, fixing part or all of their mortgage interest rate by mid this year could very well be a good move. Borrowers need to look at their situation and decide whether hedging their bets with a variable loan outweighs the benefits of fixing. If they decide to fix, then they must weigh up the pros and cons of fixing for one year or longer, given fixed rate loans tend to have a higher rate with the more fixed years a borrower commits to"
Kristy Sheppard, senior corporate affairs manager, Mortgage Choice Limited

Panel results

Institution/Spokesperson/May 09

AFM Iain Forbes 4.92%

Peach Financial Group Andrew Hunter 4.82%

AMP Capital Investors Shane Oliver 5.32%

Mortgage Choice Limited Kristy Sheppard 5.00%

Fujitsu Consulting Martin North 5.00%

Property Strategies Australia John Maher 5.30%

Resi Lisa Montgomery 4.90%

Smartline Martin Castilla 5.07%

HIA Harley Dale 5.32%

Destiny Financial Solutions Margaret Lomas 5.32%

Loan Market Group John Kolenda 5.02%

Access Loans P/L Darryl Simms 5.07%

Property Planning Australia David Johnston 5.07%

Mortgage House Ken Sayer 5.07%

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

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