While variable interest rates are continuing to rise, and will almost certainly increase further, some lenders are actually cutting their fixed rates.
Lenders started increasing their variable rates in May, once the Reserve Bank of Australia (RBA) began increasing their cash rate. However, lenders increased their fixed rates much earlier, in anticipation of future rate hikes.
RBA data shows that interest rates for fixed loans:
· with terms greater than three years have been trending up since December 2020
· with terms of three years or less have been trending up since November 2021
Recently, some lenders have concluded that the RBA will not increase the cash rate as much as they originally expected. As a result, they feel some of their fixed rates were moved too high, which is why they're now reversing course and making some reductions.
Unsure whether to go with a fixed loan, a variable loan or a split loan (which is part fixed and part variable)? We will be happy to talk you through the pros and cons of each option.
