No surge in popularity of fixed rates despite delay in timing of rate cuts
Home loan rate changes picked up slightly this week, with three lenders hiking select fixed rates over the last seven days, while another made cuts to certain rates.
According to the latest RateCity interest rates weekly wrap-up, ME Bank, Bank of Queensland, and HomeStart Finance raised their rates, while Beyond Bank reduced its two- and three-year rates. Beyond Bank’s first home buyer loan, linked to the government’s Home Guarantee scheme, now stands at 5.94%.
ME Bank also reduced its package home loan rates for borrowers with deposits between 80% and 90% LVR by up to 0.93 percentage points – a move which, according to RateCity research director Sally Tindall (pictured above), indicates the bank’s increased risk appetite for owner-occupiers paying principal and interest.
Queensland Country Bank offers the lowest advertised fixed rate for a one-year term at 5.74%, while Australian Mutual provides competitive rates for two- and three-year terms at 5.53% and 5.48% respectively. Peoples Choice and RACQ feature prominently for longer terms, with rates of 5.79% for four years and 5.59% for five years.
Among variable rates, Abal Bank leads with an advertised rate of 5.75%. G&C Mutual Bank follows closely at 5.80%, while Police Bank, Bank of Heritage Isle, and Border Bank all offer 5.84%. Pacific Mortgage Group and The Mutual Bank are slightly higher, each advertising rates at 5.89%.
For the big four banks, Commonwealth Bank’s lowest advertised variable rate stands at 6.15%, while Westpac offers 6.44% for a two-year period, followed by an increase of 0.4 percentage points. NAB’s lowest variable rate is 6.79%, with ANZ closely matching Commonwealth Bank at 6.14%.
For fixed rates, the major banks’ one-year rates are uniformly set at 6.59%. NAB and ANZ have slightly lower rates for two-year terms at 6.59% and 6.54%, respectively. Across three-, four-, and five-year terms, rates remain consistent at 6.59%, with slight variations from ANZ at 6.74% for four- and five-year terms.
“The latest ABS lending indicator data shows the average new owner-occupier loan size hit a record high of $626,055 in May, as borrowers take on bigger loans to keep up with rising property prices, particularly in the states of Queensland, South Australia and Western Australia which all recorded the highest average new loan size for owner-occupiers,” Tindall said.
“Interestingly, the popularity of fixed rates has not risen materially, despite the likely shift in the timing of rate cuts to 2025 and chatter around a potential rate hike. It rose from a rock bottom level of 1.2% of all new mortgages to just 1.7% in May – the fourth lowest proportion in ABS records.”
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