It certainly appears that lenders are having a major price war on fixed interest rates at the moment. There have been announcements almost on a weekly basis with lenders cutting fixed rates, some even making multiple cuts. Lenders are even known to be cutting rates for the life of the loan; this means it’s a great time for consumers to negotiate a better deal than what is offered first up and to lower rates on existing loans. In most cases, lenders would prefer to offer a customer a better deal rather than see them go elsewhere.
The big question is: is this having any effect on borrowing? Are new customers entering the market? Lenders and brokers alike are hoping this will encourage customers to borrow or refinance but it seems to only be doing this marginally. Reports from the media indicate that the price war is not having a huge effect and that most of the business generated is in the area of refinancing, this may be linked with many customers coming out of fixed term loans they signed up for just before the GFC.
Economic uncertainty and talk of the RBA reducing the cash rate may be forcing some to hold off fixing their rates at this time. It would be unfortunate if the consumer were to lock in a fixed rate loan only to have variable rates cut, it happened to a lot of people prior to the GFC and as mentioned many of them have just came out of those fixed term loans, so it is understandable the consumer would not be keen to be in the same situation again.
What are you experiencing at the moment? Are you refinancing loans or haven’t had a noticeable effect from the price war with lenders?
Til next time,
Lesley
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