Fixed-rate home loans hit rock bottom levels

FIXED-rate interest rate deals have hit an all time low in Australia as borrowers enjoy some of cheapest-ever costs to pay back their loans. But don’t be too easily lured.

Fixed rate loans have hit rock-bottom levels in Australia and more rate falls are expected. Picture: istock.

FIXED-rate interest rate deals have hit rock-bottom lows in Australia as borrowers enjoy some of cheapest-ever costs to pay back their loans.

National Australia Bank’s subsidiary lender UBank this week slashed their one and three-year fixed rate loan rates to just 3.69 per cent — the bank’s lowest-ever rate offers — signalling intense competition in the home loan market.

However borrowers are being warned not to be easily lured into locking in fixed rate deals by lenders as further rate falls are expected later this year.

Finder.com.au spokeswoman Bessie Hassan said fixed rate loans are at their lowest levels. Picture: Twitter.

The Reserve Bank of Australia slashed the cash rate to a record low of 1.75 per cent last month and while it isn’t tipped to fall again this month, both fixed and variable rate loan deals are likely to plummet further this year.

Financial comparison website Finder.com.au’s spokeswoman Bessie Hassan said these latest deals are “among the lowest fixed rates we’ve ever seen.”

“Banks are offering some of the most competitive deals we’ve ever seen and sometimes they are trying to lure customers with added incentives such as cashback offers, rewards programs of the waiving of annual or ongoing fees,’’ she said.

But she warns fixed rates are not always the best option for customers.

“Fixed rate loans can be somewhat inflexible and there’s money to be made in the form of break fees if customers decide to break their fixed term early,’’ Ms Hassan said.

According to their database on a $300,000 30-year home loan the average standard variable rate is 4.95 per cent and the monthly repayments are $1601.

On a three-year fixed loan the average rate is 4.52 per cent and the monthly repayments are $1524.

UBank chief executive officer Lee Hatton said there are many fierce mortgage deals available. Picture: News Corp Australia.

UBank’s chief executive officer Lee Hatton said the competition in the mortgage market was intensely fierce and said the online-only lender was looking to drive competition even further as more borrowers flocking to fixed their loans.

“In the market there has been a sense of people less likely to take fixed rates,’’ she said.

“There was a lull last year in June of about nine per cent but we are seeing now it’s up around 14 per cent.”

Rising Tide Financial Services’ managing director Chris Browne also warned borrowers to understand the term around fixed rate loans because there can be restrictions on making extra repayments and penalties if the loan is paid off early.

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Originally published as Fixed-rate home loans hit rock bottom levels