Fixed Home Loan Rates are Heading Down

While banks have been reducing their fixed interest rate deals marginally across 2024, this month we are seeing many large and small Lenders cutting basis points on their fixed interest rate deals.

Is this in anticipation of a potential cash rate decrease? If inflation trends and global market movements continue as expected, the Reserve Bank of Australia (RBA) may lower the target rate next year.

AU preference of fixed interest rate vs. variable home loans 2024 Earlier this year, we discussed the differences between fixed and variable home loans and when it could be beneficial to choose a fixed rate. With the current landscape, now might be the right time to reassess your options.

Despite the existing preference for variable rate loans (with only 2.6% of borrowers opting for fixed home loans, see graph above) — there’s potential for this trend to shift. So, with the recent adjustments in fixed rates, it’s worth considering whether a fixed loan could better suit your financial situation as conditions evolve.

Will we see more borrowers transitioning to fixed rates in the near future? Only time will tell.

Some appealing deals for fixed rate loans hitting the market

The big four banks, along with various smaller lenders, are rolling out new lower fixed rate deals, including:

CBA cut its 1, 2, 3 and 4 -Year fixed terms up to 0.70%
Westpac has slashed 0.80% off its fixed mortgage for 2, 3, 4 and 5 – Year fixed rates (5.89%) for customers that own at lease 30% of their property.
NAB cut interest rates on their fixed-rate home loans also
While Newcastle Permanent has also just announced a 5.59%p.a 2 Years fixed rate* with a comparison rate of 7.93%p.a to loans with an LVR of less than or equal to 80% *see their website for conditions

As customers start to seek better rates with the anticipated decrease in the cash rate, lenders are adjusting their fixed rates to attract new borrowers and retain existing ones. This strategy helps lenders offer appealing products that encourage customers to lock in favorable rates for their mortgages, providing them with stability regarding market rates over a specified period.

While this approach primarily benefits lenders by reducing the likelihood of customers switching to competitors, it also presents an opportunity for borrowers. For many, this could be the ideal time to secure a better deal and find a loan that better aligns with their current financial needs and goals. With careful consideration, borrowers can take advantage of these adjustments to enhance their mortgage situation.

When Is a Good Time to Move into a Fixed Rate?

While it’s impossible to predict the market with absolute certainty, there are some key factors to consider that can help you make an informed decision about moving to a fixed rate:

Market Forecasts: Review economic forecasts and trends to determine if locking in a fixed rate would be advantageous for your financial situation over the duration of the loan.
Personal Financial Circumstances: Assess your specific financial situation. Running various scenarios can be complex, so consulting with a local mortgage broker on the Central Coast can provide valuable insights tailored to your needs.
Offset Account Considerations: Evaluate whether an offset account would benefit you. Most fixed rate loans do not allow for offset accounts, and you typically cannot redraw funds from a fixed loan, which could impact your cash flow.
Clarify Your Options: Reflect on these questions to understand your options better and identify which numbers make sense for your situation. Being prepared to act on beneficial fixed rate offers is key.
Split Loan Options: Consider a split loan, where a portion of your loan is fixed and the rest is variable. This approach can provide a balance between stability and flexibility.

Taking the time to assess these factors will help you make a more informed choice about whether moving to a fixed rate is right for you. For personalised guidance, reach out to our expert mortgage brokers today!

Our experienced mortgage broker team is here to help you determine if refinancing to take advantage of lower fixed rate deals is the right move for you. Call our local finance brokers on the Central Coast at 1300 141 453 for personalised advice and support!