RBA Holds Rates for the Longest Time Since 2003
At its September meeting the Reserve Bank of Australia (RBA) announced that it will keep interest rates at 2.50 per cent for the 13th consecutive month, the longest period of rate stability in ten years.
Chairman of Loan Market Sam White said that despite any movement in the cash rate in over a year, lenders were using ultra-low fixed rate products to attract new customers.
“At some point we’re going to see the cash rate move and competition between variable rates fire up again but for the time being lenders are using fixed rates to attract new clients,” Mr White said.
Mr White said the popularity of fixed rates has never been higher with one of the major banks on Loan Market’s panel suggesting demand for fixed rates has doubled in the past few weeks.
“For consumers the security of fixing your home loan at a rate below four per cent is certainly something worth considering. There likely hasn’t been a homeowner with a home loan that low in twenty years,” he said.
Mr White suggested that with lenders moving to match or beat competitors interest rates, consumers were in a great position to bargain for a better rate by using a mortgage broker. In July this year a research study found that 50 per cent of all home loans were now written by a mortgage broker.
“Your mortgage broker will compare your loan against thousands of others and can potentially negotiate a better deal for you with between several lenders. If you already have a home loan your lender isn’t going to want to lose you, so talk to your broker to make sure you’re getting the right deal,” Mr White said.
The 13 month rate hold is the longest in just over a decade with the next longest hold being from July 2002 to October 2003 when the RBA left rates at 4.75 per cent.
The RBA meets next on October 7th.