With Christmas fast approaching the last thing on most people’s minds is mortgages and interest rates!
However, in the last 2 weeks there have been some major developments.
After a long period of historic low fixed rates, several lenders have started to increase these rates.
The reason appears to be twofold.
First, many lenders were competing for business on these rates, and while their cost of funds was increasing they were maintaining the lower rates to gain market share. It seems that most lenders could not sustain this level of discounting so the fixed rates were lifted. In most cases it was the 3 and 5 year fixed rates (the most popular) that were affected.
Secondly, fixed rates can, in general, reflect an ‘expectation’ of where the variable rate might be in future. With the expectation now that we’ve seen the last of the RBA rate cuts, this adjustment has moved the fixed rates more in line with current variable rates.
If you are already fixed then this won’t affect you.
If you were contemplating fixing your loan then the rates you have been looking at may have increased.
The other big shift is the re-pricing of investment loans.
Investment loans, and to a lesser degree Owner Occupied loans with an Interest Only repayment, have come under more intense scrutiny from the Regulators (APRA and ASIC). As such, most lenders have now increased the rate on these loan types. The increase has been between 0.07% and 0.15% depending on lender and will be passed on in the coming weeks.
Take the worry away and enjoy Christmas;