With the cash rate nearing the bottom of its cycle brokers can expect an upswing in fixed rate product enquiries.
According to data released by Mortgage Choice yesterday, demand for fixed rates appears to be turning a corner, after diminishing to just 2 per cent of all of the brokerage’s approvals in November last year.
In December and January fixed rate loans crept up to 3 and then 4 per cent, Mortgage Choice said.
But fixing home loans at the exact right moment remains difficult.
While futures markets are currently pricing in a 0.5 per cent rate cut in March, some banks have indicated that whole rate reductions may not be passed on.
“Interest rates on mortgages will probably move only slightly further south,” Mortgage Choice’s senior corporate affairs manager Kristy Sheppard said.
But John Kolenda of Loan Market Group has warned that borrowers should hold off before locking in a fixed rate.
“The RBA has acknowledged that the market expectation is for the trough in the cash rate to be around 2.0 per cent later in the year,” he said.
“When the central bank starts making smaller cuts that will demonstrate that it believes it has gone about as low as it needs to with the cash rate.”COMMENT HERE
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