Financial experts believe home loan interest rates could fall further in 2019

The RBA has kept the cash rate on hold at 1.5 per cent since August 2016 but there is strong speculation it could fall further.

Detailed in the minutes from their last meeting, the RBA point to a lift in the unemployment rate and stagnant inflation, which experts say could result in an imminent cash rate cut.

Another clue is the recent activity by home loan lenders, with at least two of the big banks – CBA and Westpac – moving to slash their fixed rates (some by as much as 0.2 base points) on a range of home loan products for owner occupiers and investors alike.

Another home loan lender, Suncorp, has also rolled out an introductory three-year fixed rate special for borrowers paying principal and interest, offering 3.49% for owner occupiers and 3.69% for investors.

Bendigo Bank is offering a significant discount to borrowers, slashing its basic variable rate from 4.28% to 3.79% for owner occupiers paying principal and interest.

It’s the first time in months we’ve seen this much activity across the board from a range of home loan lenders, but the million dollar question remains (as usual) – “Should I fix?”.

It’s important to consider your own unique objectives pertaining to your home loan (and ofcourse we recommend this is done in conjunction with an experienced mortgage broker) but it’s also important to scrutinise the motives of the lenders in the wider context of the fiscal environment we currently find ourselves in.

From a skeptical standpoint, the lenders are predicting that rates are set to be cut further by the RBA in the coming months and, as such, will be trying to lock their customers in by offering attractive fixed rate products.

However, it’s important to consider the possibility that rates may fall even further, so fixing now is a gamble that may not pay off.

If your priorities are to have certainty of repayments and remain unaffected by any interest rate rises (which seem unlikely in the mid term future anyway) then fixing may be a suitable option, but it’s important to consider the fine print to ensure it fits with your situation and goals. Fixed rate loans may not be suitable if you are thinking about selling your home or want the freedom to switch home loans if you find a better deal.

Some common disadvantages associated with fixing your home loan include:

  • You won’t benefit from a drop in interest rates if your fixed rate is more than the variable rate
  • You are likely to have limits on making extra repayments
  • You are unlikely to have access to a redraw facility
  • Fixed rate loans may have a break fee if you change or pay off your loan within the fixed rate period.

With hundreds of home loan products to compare, it’s prime time to sit down and chat through your options with us. Daniel can come to your home or work at a convenient time for you and discuss the most suitable plan of attack.

If you’d like to know more about how using a broker can benefit you, click here or contact us to make an appointment today.

* All lending subject to status and lenders criteria. Terms & conditions apply. This document contains general information only. Your own personal circumstances have not been considered and you should seek independent financial advice prior to making any decision on a financial product

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