Bluestone Mortgages has made significant reductions on two of its home loan rates despite the Reserve Bank keeping the cash rate on hold.
The specialist lender’s three-year fixed rate is now 30 basis points lower than the current variable rate, while its two-year fixed rate has been cut by 20 basis points.
Bluestone CEO Campbell Smyth said fixed rate loans make up between 15 and 20 per cent of the prime mortgage market, but have traditionally been unavailable to specialist borrowers who have had to deal with a limited choice in loan structures.
The thinking in the specialist lending space has been that these type of borrowers would not benefit from fixed rates, as their goal is to refinance into a prime mortgage as soon as possible.
“The reality is that just the opposite is true. Fixed rates are more suited to specialist borrowers in some ways. A fixed rate means a fixed payment, which gives borrowers certainty and allows them to choose the period of time in which they intend to get back into a position to re-enter the prime market,” Mr Smyth said.
“And that’s why this move is such a positive for specialist borrowers. Not only can they lock in a known payment, they can lock in a lower payment than the one they would have had with a variable rate loan.
“It’s an important step in helping specialist borrowers borrow money and get their finances on track.”
Bluestone’s rate cuts come after the RBA decided to keep the cash rate at the record low 1.75 per cent at its monthly board meeting on Tuesday.
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