Wishful thinking or soon to be pleasant reality?
New home loan borrowers have left no doubt as to where they think home loan interest rates are heading in the future.
Australian Bureau of Statistics (ABS) data published this month showed just 11.7 per cent of new Australian home loan mortgages approved in June 2008 were set at a fixed rate, a fall of 12.2% from the march 2008 figure of 23.0%. Interestingly the June 2008 figure, is the lowest since October 2005.
Yet another sign that mortgage borrowers may be expecting an interest rate cut has been the increased take up of standard variable home loans. Mortgage broker confidence in the standard variable product in full doc and low/no doc form is justifiably high as the major lenders join the home loan borrowers by embracing the old standard variable product by reducing or waiving their application fees.
If the Reserve Bank deliver a rate cut, the housing sector will receive a boost, which may lead to improved consumer confidence and a further reduction in the amount of home loan and mortgage borrowers taking out fixed loans. However, if you want a little certainty going forward, fixed rate home loans will become more attractive as the major lenders try to tempt mortgage borrowers with enticing offers.
Mortgage Brokers and other home loan industry experts, report that a ΒΌ of a percent or 25 basis point easing in official interest rates will only lead to a reduction in standard variable lending rates by 12 to 15 basis points, but competition for new business is hotting up and they expect the banks and other major lenders to reduce their rates going into the new year as profit competition hots up and mortgage stress is relieved.
So, if you need to refinance to consolidate your debts or need to borrow for a new home or investment property, seek out your friendly mortgage broker and get the low down on the rates and deals going after the dust settles from the RBA announcement. For information on interest rate trends see Historical Interest Rates 1959 to 2009 here.