Just one day after the Commonwealth Bank announced it would cut the interest on some of its fixed rate products, a number of other lenders have decided to jump on the fixed rate bandwagon.
ING DIRECT and St George have both cut the interest on their fixed rate home loans.
Effective from 10 August, ING DIRECT will slash its one year fixed rate to 6.59 per cent, while its three and five year rates now sit at 6.69 per cent and 6.99 per cent.
At the same time, St George also slashed up to 20 basis points from its two and three year fixed rate home loans.
From today onwards, the lender will boast a two year fixed rate of 6.69 per cent and a three year fixed rate of 6.79 per cent.
St George chief executive Rob Chapman said ongoing economic uncertainty had encouraged more borrowers to look at their fixed rate options.
“We encourage customers to consider if they have the right home loan to suit their needs. Customers have the option of splitting their home loan between fixed and variable rates, as well as a range of other flexible home loan options,” he said.
Meanwhile, Loan Market’s chief operating officer Dean Rushton has strongly urged Australians to seek advice if they are considering some of the cut price fixed rate home loan products now being offered.
“Obviously the broader issues of the market instability are continuing to derail consumer confidence, and we want to ensure that consumers make the right decision for the long term,” Mr Rushton said.
Mr Rushton said the fixed rate cuts were a reaction to the global share market volatility with lenders moving quickly to adjust rates in advance of a cash rate adjustment by the Reserve Bank of Australia.
Mr Rushton said lenders wouldn’t be rolling out price cuts without a strong feeling that a rate decrease by the RBA is now on the cards.
“We’re now more certain than ever that there’s a clear case for the RBA to bring rates down,” he said.
Mr Rushton said more than 100,000 Australians committed to fixed rates of more than eight per cent just before the last global financial crisis in 2008.
“There was much speculation about fixing rates at that time, and unfortunately many consumers had to sit on the sidelines and watch rates dramatically drop in the span of several months,” he said.
Mr Rushton said borrowers need to ensure they were locking into a fixed rate for the right reason, some of which included certainty of repayment and peace of mind rather than as a speculative play on where rates are going to move.
He said a mortgage broker was best placed to offer advice on issues such as fixing your interest rate, or taking a rate that’s partially fixed and variable.