Over a third of Australians think that the central bank will hike rates this year, which could potentially lead to an increased demand for fixed rate products.
A total of 38% of Aussies believe that rates will head upwards in 2013, according to the National Mortgage survey conducted by CUA. Rates will fall this year in the opinion of 37% of the respondents, while 26% believe that rates will stay intact. The survey results suggest that fixed rate offerings will become more attractive, said CUA general manager of products and marketing Jason Murray.
The findings come as Westpac and its subsidiary, St George, lowered their fixed rate offerings, with CUA making a similar move by launching a three-year fixed mortgage rate of 5.30%, which it claims is up to 29 basis points below the current three-year rate propositions by leading lenders.
As the global and local economy show signs of rebound, variable rates may go up in the coming months, so it could be the best time for locking in your mortgage rate, Murray said, as quoted by the Australian Broker.
Picking a fixed or a variable rate is a personal choice, depending on the borrower’s actual needs and risk aversion and that’s where brokers do a great job helping customers, Citibank’s mortgage expert Belen Lopez Denis commented.
The unique opportunity presented by an inverted yield curve makes fixed rates a cheap proposition for lenders and borrowers. The bank has seized this opportunity early with brokers, focusing on fixed rates and reviewing them on a weekly basis to stay updated on major money market developments, said Lopez Denis.
The bank has just rolled out a six-month fixed rate, which could be an attractive option for those who believe that the central bank’s easing cycle will continue. The newly launched product offers the borrower the flexibility to benefit from potential variable rate reductions over the next six months. Borrowers will have an additional certainty if they combined it with the bank’s 60-day free rate lock, the official added.