When will interest rates fall? It’s the question on everyone’s mind, and recent moves in fixed rates suggest we may not have to wait much longer for variable rates to head south.While about 80% of Australian households currently have variable-rate mortgages, fixed-rate home loans shouldn’t be overlooked. Locking in a fixed rate can offer certainty of repayments and protection from potential rate hikes during the fixed term.
<< 2024-09-12 Lowest fixed rates from 5.59% >>
Major Banks Lead the Charge
A growing number of lenders, including several major banks, are cutting fixed rates across all terms. Macquarie Bank, Commonwealth Bank, HSBC, Bank of Queensland, Westpac and its brands have all recently reduced some of their fixed rates. Smaller lenders like Hume Bank, MOVE Bank and Great Southern Bank have followed suit.What’s particularly noteworthy is the size of these cuts – some are worth half a percent or more for 2- to 3-year fixed rate terms.
Why Are Fixed Rates Falling?
Fixed rates are largely influenced by lenders’ forecasts of future interest rate trends. In this way, they can serve as a bellwether for the direction of interest rates. Among the major banks:
- Commonwealth Bank expects a 0.25% RBA rate cut in late 2024
- ANZ anticipates an RBA rate cut from February next year
- NAB predicts a rate cut by mid-2025
- Westpac expects several rate cuts starting in March 2025
Encouragingly, none of the big four banks are forecasting rate hikes in the near future.
What This Means for Borrowers
The trend towards lower fixed rates suggests variable rate cuts may not be far off. Currently, fixed rates can be lower than variable rates depending on the lender, fixed term, and deposit size. If you’re struggling with repayments, locking in a fixed rate for 1-3 years could provide certainty and relief. However, this needs to be weighed against potential variable rate cuts you might miss out on during that period. Remember, rate cut predictions are forecasts, not guarantees. Another option to consider is splitting your loan between fixed and variable rates, potentially giving you the best of both worlds.
For personalised advice on whether fixing or splitting your loan rate could help you save, don’t hesitate to reach out to us today.
