Property Don't miss out on the headlines from Property. Followed categories will be added to My News. Hundreds of mortgage fixed rates have been cut by lenders in recent weeks as forecasts firm for a Reserve Bank of Australia interest rate cut within six months.
Some fixed rates are now under 5.6 per cent across one, two, three, four and five-year terms, and it may seem tempting for borrowers to lock in now – particularly as many pay between 6.5 and 7.
5 per cent on their variable-rate loans. However, to borrow words from classic TV series the Lone Ranger (not to be confused with the loan arranger): “whoa there Kemosabe!”. Anyone considering galloping into these lower fixed rates right now risks a pile of regret down the track.
That’s because many lenders are offering these lower interest rates because there’s a chance they’ll make some good money out of borrowers who lock in now, just before a likely string of rate cuts for variable loans. The Lone Ranger would probably say “whoa there, Silver” when it comes to fixed rates. Interest rates already have started falling overseas as central banks aim to ease pressure on indebted households and businesses.
Australia’s RBA is likely to be among the last to reduce rates, because it was one of the last to lift them back in 2022 and has not gone as high as other countries have. If you lock in a multi-year fixed-rate home loan now at a nice rate below 6 per cent, you may be ahead financially for several months while b.