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Fixed rates falling faster than variable rates

by Nick Bendel4 minute read
The Adviser

Interest rates are continuing to trend downwards, with non-majors leading the way, new research has found.

The average variable rate fell from 5.37 per cent to 5.33 per cent between 1 October 2014 and 1 January 2015, according to comparison website RateCity.

One-year fixed rates fell from 4.77 per cent to 4.74 per cent, three-year rates from 4.97 per cent to 4.93 per cent and five-year rates from 5.26 per cent to 5.18 per cent, RateCity said.

Product director Peter Arnold said most of the rate cuts in the quarter came from smaller lenders, after the big four banks led the way in the previous quarter.

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Mr Arnold said variable continued to fall gradually, while fixed rates again saw the largest cuts.

"[That continues] the trend of 'lower for longer', suggesting that a cash rate hike may still be a way off, combining with chatter about an increased likelihood that the next move is down," he said.

Mr Arnold said most rates remain at historic lows and, while they may go lower still, are expected to ultimately rise.

ME Bank last week slashed its five-year rate to 4.69 per cent, which it said was the result of cheaper funding costs.

 

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