Update on interest rates

Big 4 Banks cutting interest rates

Considering how much talk there has been in the media recently about the potential for the Reserve Bank to increase official interest rates at some point in the future, it’s been interesting to watch the Big 4 Banks taking their interest rates in the opposite direction over the past few weeks.

Recent reductions in interest rates

As recently as this week, we have seen both the National Bank and the ANZ announcing cuts to their fixed rate loans for both owner-occupiers and investors. The NAB has cut 0.5% off the rate offered on some of their 5-year fixed loans for owner occupiers, whilst their two-year and three-year fixed rates on interest only investment loans have been cut by 0.3%.

The ANZ has also taken the knife to their three-year and five-year interest only investment loans, cutting their rates by 0.4%.

These moves are being seen as a reaction to moves by Westpac and the Commonwealth Bank. Last week the CBA cut its two-year fixed interest-only loan for investors from 4.84% to 4.34%, a reduction of 0.5%. Westpac also reduced their interest-only offers to investors as well.

Our sources in the mortgage broking world tell us that they have noticed similar actions from several of the smaller lenders, including Aussie, St George and ING.

Official interest rates likely to stay steady

Whilst these moves are indicative of a highly competitive lending market, which is always a good thing for anyone seeking a mortgage loan, they also provide an important message for the wider property market. Simply put, most financial commentators will tell you that the lenders would not be reducing interest rates on their longer term fixed rate loans if they were expecting the Reserve Bank to move official rates upward in the near future.

So, whether you are planning on refinancing or not, it is important to keep an eye on market movements like these, and to seek out the assistance of an independent mortgage broker before you commit to any deal offered by your bank.

If you are looking at interest rates with a view to making a move in 2018, be sure to get your FREE copy of our booklet, Fatal Real Estate Traps Exposed, while you’re here on our website.

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