Fixed Rates on The Rise

Posted on November 12th, 2013 · Posted in News

Fixed term interest rates have increased for the first time in three and a half years and variable rates are set to rise, with experts calling the end of the current cheap home-loan cycle.  Bank sources and economists blamed the rise on increases in funding costs, with the big four banks quietly hiking their fixed terms by 0.3% in October.

The fixed rates reversal began in September, with eight lenders increasing prices. Another 10 hiked in October, including all four majors – by as much as 0.3%. By contrast, 58 lenders cut fixed rates in August.

The number of fixed-rate loans written in 2013 across Australia has increased by 534% compared to 2010 levels.  Earlier this year fixed rates accounted for 21% of all loans written. That has since dropped back to 16% with the average fixed rate loan size increasing.  The increase in loan sizes suggests fixed-rate borrowers have been willing to pay more for property.

RP Data head of corporate affairs Craig Mackenzie said low fixed-rates had encouraged more investors to join the fray.  “With growth in rental yields … and low fixed rates, investors are likely to have been influenced into the market given they are able to cover their funding costs more fully and look towards expected capital growth in future years,” Mr Mackenzie said.

“At some point the music is going to stop,” Mr Braddick, ANZ’s Head of Property said.

Have you been thinking about locking in a fixed rate but haven’t found the ‘time’ to do it yet?  Now is a great time to act while rates are still low.  Contact us today for a FREE finance review so we can help you Strengthen Your Financial Future and take advantage of these potential savings.

 

 

 

 

 

 

 

 

Original Story Source: ninemsn.com.au