While the RBA is set to remain on hold today, lenders are starting to hike longer-term fixed rates as they factor in at least one cash rate rise in 2024.

Analysis of the RateCity.com.au database shows there are now just six four-year fixed rates under 2 per cent, down from 32 at the start of the year. There are now no five-year fixed rates under 2 per cent.

Conversely, shorter-term fixed rates ending on or before 2024 are still ultra-competitive. Since the start of the year, the number of two-year fixed rates under 2 per cent has more than doubled to 71, while the number of three-year fixed rates has almost doubled to 49.

Number of home loan rates under 2 per cent

  Pre COVID

(1 March 2020)

1 Jan 2021 Today

(May 2021)

 
1 yr fixed

0

24

35

 
2 yr fixed

0

30

71

 
3 yr fixed

0

28

49

 
4 yr fixed

0

32

6

 
5 yr fixed

0

3

0

 
Variable

0

15

21

 
Total

0

132

182

 

Source: RateCity.com.au Rates include owner-occupier and investor loans. Some lenders offer multiple rates under 2 per cent. A list of lenders under 2 per cent available on request.

How much longer will rates under 2 per cent hang around?

RateCity.com.au research director, Sally Tindall, said: “When COVID hit, there wasn’t a single home loan rate under 2 per cent. Today, there are more than 180 but don’t assume they’re all going to hang around.”

“The RBA isn’t intending to hike the cash rate until at least 2024, but many home loan rates will rise earlier, particularly fixed ones,” she said.

“Banks are already hiking their four- and five-year rates, while three-year rates are likely to be the next cab off the rank. We expect some of them could start moving north in the second half of this year.

“For anyone who hasn’t recently refinanced, it’s not too late to shop around for a better deal, whether that’s fixed or variable,” she said.

Analysis from RateCity.com.au shows if a home loan customer with a $500,000 balance owing switched from the average existing customer rate of 2.99 per cent to the average new customer rate of 2.50 per cent, their monthly repayments would drop by $125 and they could save up to $7,152 by this time in 2024.

“Don’t let the paperwork put you off. If you’re in a position to refinance, you could save thousands by switching to a lower rate loan,” she said.

Note: refinance calculations are based on an owner-occupier paying principal and interest with 25 years remaining on their loan. Rates are based on the RBA’s average new and existing customer rates for owner occupiers across all loans and assumes rate remains the same over this calculation. Includes discharge fees but does not include application or ongoing fees.

Lowest rates on RateCity.com.au database

  Lender Rate
1 yr fixed BCU

1.67%

2 yr fixed Homestar Finance

1.74%

3 yr fixed Credit Union SA

1.79%

4 yr fixed BankVic

1.95%

5 yr fixed Bank Australia

2.10%

Variable Reduce Home Loans

1.77%

Source: RateCity.com.au. Rates are for owner occupiers paying principal and interest. Some LVR requirements apply. Rates accurate 04.04.2021.

 

Big four banks – lowest owner-occupier rates 

  CBA Westpac NAB  ANZ
1 year fixed

2.09%

1.99%

2.09% 

2.04%

2 year fixed

1.94%

1.79%

1.89%

2.04%

3 year fixed

2.14%

1.88%

1.98%

2.04%

4 year fixed

2.19%

2.19%

1.98%

2.24%

5 year fixed

2.99%

2.49%

2.24%

2.24%

Variable

2.69%

2.19% for 2 yrs then 2.69%

2.69%

2.72%

Source: RateCity.com.au. Note: Westpac’s rates are for a loan to value ratio of 70%. Rates accurate 04.04.2021.



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