3 out of 4 of Australia’s largest banks are now offering fixed home loan rates of under 3%. That means huge things for the future of Australia, provided that customers are actually looking to lock themselves into a new home.
The National Australia Bank cut some of its fixed interest rates on home loan contacts today, deciding to offer new package home loan options that come at under 3%. These deals are designed for owner-occupiers that are willing to lock themselves into their home loan for at least two or three years at a time. Additionally. The two and three-year fixed loans for owner-occupiers that pay interest and principal also have rats advertised at 2.98%, which is a huge discount on some of the comparative rates out there.
Following Other Banks
The move to reduce prices comes following similar reductions from other major competitors in the market, including the Commonwealth bank and ANZ. Both of these companies are lowing their fixed rates for two and three-year terms with rates starting with a 2. This was a response to the cash rate cut made by the Reserve Bank in October.
Financial experts have said that not many customers are talking about fixed rates at this time, with only around 10% of homeowners considering the option. The banks have a very favourable offer to help bring people into the door, but that won’t mean that homeowners will take the plunge and go for the fixed rates. Customers often think that rates will end up going down further, which means that they’ll want to stay with something more variable. Borrowers are typically very reluctant to fix and lean towards variable loans instead.
According to Mickenbecker, lower wholesale funding costs for the banks had been the main factor that allowed the companies to offer lower fixed rates. He notes that today’s banks want to remain as competitive as possible in the changing market, and that fixed revenue rates Are a great strategy, because they allow the banks to establish a competitive rate in the market without having an impact on the margin earned from existing customers.
Additionally, NAB recently lowered a number of fixed investment home loans across standard and package loan options. The fifth-largest bank in Australia also reduced a range of fixed rates, taking them down to under 3% for some of the principal and interest-paying owner occupiers in the space.