Four million mortgage holders in Australia have been urged to shop around for the best loans after the central bank’s rate cut brought fixed loans down to their lowest levels in three years.
The rates of one- to three-year fixed-rate loans fell below that of standard variable rate (SVR) loans, as major lenders compete for a slice of the country’s AU$1.12 trillion (S$1.43 trillion) home lending market.
Australia’s big four banks are Westpac, National Australia Bank (NAB), Australia and New Zealand Banking Group (ANZ) and Commonwealth Bank.
But a study by financial comparison site Mozo.com.au revealed that the major banks were more generous in slashing the SVR than fixed loans since the RBA started cutting interest rates in November 2011.
The banks’ average cut on SVRs stands at 1.18 percent compared to 1.06 percent for one- to three-year loans.
Rohan Gamble, Managing Director at Mozo, said that splitting the mortgage evenly between fixed-rate loans and SVRs is a good move in the current situation as further cuts are likely.
“And this means you can still see some benefit of any further variable rate cuts over the next year.”
Romesh Navaratnarajah, Senior Editor of PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
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