Fixed rate home loans could become a lot more attractive to home owners, one industry stakeholder has claimed.
Speaking to The Adviser, Citibank’s head of mortgages strategy, marketing and product Belen Lopez Denis said the three year bank swap rate had fallen by 40 basis points overnight, which could encourage lenders to cut the interest on their fixed rate products.
“Economists have said the 40 basis point drop is the biggest they have seen in sometime. If the bank swap rate stabilises at this current level, then we could see banks cut their fixed rates further. If this happens, in many instances, lender fixed rates would be cheaper than the variable rates, which could push borrowers to fix their mortgage,” she said.
According to Mrs Lopez Denis, well priced fixed rate products could prove very enticing as borrowers are keen to have certainty around their mortgage repayments.
“The market is very volatile at the moment. Borrowers do not know whether rates will go up or down, so many would feel comfortable locking in at a very affordable rate,” she said.
Late last month, Citibank slashed the interest on its three and five years fixed rate products taking them to 6.99 per cent 7.44 per cent respectively.
Mrs Lopez Denis said Citibank is constantly reviewing its rates to ensure they are market leading.
“At Citibank, we don’t charge borrowers for using our 60-day fix lock feature unlike many other lenders. So, if you apply for a loan at a certain fixed rate, then that is the rate you will pay when the loan is approved and settled.”