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To fix or to vary? ... the big Rates question

New Year's sales may be over, but home mortgagees may enjoy even further savings with fixed home loan rates from Big-Four bank, NAB, plummeting this week – but more about this later in the article.

Home mortgagees get their 'fix'

Record low interest rates are gradually changing the way people are financing their home with more and more opting for fixed rather than variable home loans. December 2013 figures reported17.4% of all home loans being fixed – that's almost 50% higher than the 10-year average.

And this strong trend is set to possibly even increase in the short-term. Although variable interest rates are forecast to remain on hold until 2015, Commsec economist Savanth Sebastian feels that home lenders could start increasing fixed rates after the next few months due to an expected increase in the bank bill rate and increasing lending rates in the USA. However, this is just what has NOT happened earlier this week, with the NAB actually cutting their fixed home loan rates.

Mr Sebastian considers now the best point to fix home loans, as "The cash rate has probably bottomed. The (fixed-rate) lows have been reached and clearly people are more and more confident of that."

Fixed rates slashed

NAB have thrown down the home-loan gauntlet, now offering their lowest fixed home loan rates since September 1993 – that's over 20 years ago! Four-year home loans were lowered to 5.44% on Monday – a reduction of 0.2%, with three-year home loans now down 0.5% to 5.14%.

This places NAB as 'cheapest' fixed home loan lender of all Australia's major banks in the 1, 2, 3 and 4 year range.

"We know that now is the time people are looking to get their finances in order as they plan for the year ahead, especially those looking to buy their first home,'' explained NAB's head of personal banking Gavin Slater. "We're really proud of our commitment to remain competitive and continuing to offer the best products with the best deals and the best service."

Will the other Big-Four banks follow suit?

Chances are 'yes' to some extent, if their past reactions are anything to go by. But who knows by how much and for how long??

THAT is the 64-million-dollar question.

... so stay tuned to this channel for more news ...

 

(Source: Courier Mail, Property Observer, Louise Moeller - HS Brisbane Property marketing)

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