By Megan Speight
Last Wednesday the Commonwealth Bank made history when it monumentally slashed its fixed
term interest rate on a 5 year term to below 5%. NAB and Westpac followed suit within hours,
leading to the lowest fixed rate for home loans that the Nations ever seen. Experts around the
Country are encouraging customers to take advantage and lock in on the low rates.
Chief Executive of RateCity, Alex Parsons says 4.99% on home loans was very sharp and an
excellent deal. AMP Capital’s Chief Dr Shane Oliver agrees, stating economic indicators showed
borrowers needed to take advantage of the low rates before predicted a rise again in 9 months time.
With non bank lenders already offering similar rates in the past, the major banks are facing more
competition than ever before. Gavin Slater head of NAB’s retail banking says the bank has
experienced a strong demand for fixed rates products in the past 12 months. “We know many home
owners are looking for certainly, weather they are investors, or first home buyers, and NAB is
offering that through these market leading, fixed home loan rates”. Mr Van Horen, Commonwealth
Banks general manager of Home Loans says “There’s probably more competition today than there’s
been in many many years- some people would say many decades”.
Strong economic factors such as the strength of the dollar and international investment in Australian
bonds have enabled banks to offer consumers something never seen before in the home loan market.
Five years fixed for 5%. Whilst some speculate the rate may drop further still, they all agree it wont
last. With many experts predicting rises around the middle of next year, they are urging customers
to take advantage and switch to fixed rates as the banks will only have a certain amount of money
to lend at these rates. Five years for 5 is a sure thing, and as far as rates go, the only thing certain is
With the mortgage market being worth a mere 1.3 trillion, the big banks cant afford to get it wrong.
Neither can the consumer. Both investors and home owners need to consider if the switch is right
for them. We have seen many contracts with hidden clauses and exit fees that if not considered, can
cost as much as you save. Changing your mortgage at the right time in the right way can sometimes
save customers thousands of dollars over the term of their loan. The banks want your business, but
they don’t want to loose money so its fair to say they haven’t made it easy. Professional Broker
services and competition have forced the big banks into giving the customers a better deal. Buy
lowering the fixed rate on a five year term they are giving consumers a ray of light in the hope to
keep you on board. This is the time for individuals to negotiate a better deal and make the banks
work with you to give you maximum benefits on your loan. With the right advice, home buyers can
once again have confidence in the market, and start to make plans for a brighter financial future.
This announcement, combined with a recent decrease in housing prices across the board, indicates
a positive change for those paying off and looking to own a home. After stumbling through the
financial crisis and the Government bumble with national debt, we have been given a grace period
– now is the time for consumers to reassess their financial plans and take advantage of the strong
economical position we are in as a country. This is the booster shot we have been waiting for and
will loosen the straps for many families and individuals. Owning a home can once again be seen as
an investment for your future, a path to financial freedom and a secure place to call your own.
Five years fixed for 5% may never be seen again in the home loan sector. Have you ever asked
yourself where you want to be in five years? With banks giving out the lowest rates in history –
you might just get your chance.
