Australia's home loan interest rates have officially fallen to their lowest level in two and a half years, according to new research.
Data from RateCity found fixed rates have taken the steepest dive, with three-year fixed rates falling to just 6.29 per cent on average in December and starting at just 5.75 per cent – 150 basis points lower than the average recorded in 2010.
With successive reductions in the Reserve Bank of Australia's cash rate, standard variable home loan rates have also continued to fall steadily throughout the course of the year and have now reached their lowest point since May 2010, dropping to just 6.89 per cent on average.
RateCity's chief executive Damian Smith said lenders are trying to kick start a sluggish mortgage market with attractive deals on fixed and variable rate home loans.
"There were just over 5,300 more borrowers in the property market in the year to October compared to the previous 12 months. While that's not a dramatic increase it does equate to more than $2.5 billion in additional mortgage activity in 2011," he said.
"More importantly, it's the first time we've seen an increase in borrowing in 16 months and the combination of lower rates and flat-to-declining property prices are driving this."