Competition is intensifying in the fixed rate space with one of Australia's non-majors dropping its three year fixed rates yet again.
Yesterday, Citibank announced it would cut the rate on its three year fixed rate to just 5.94 per cent. Since July this year, the lender has hacked 138 basis points from this particular fixed rate term.
Speaking about the rate cut, Citibank's head of mortgages Vibha Coburn said a rare inverse in the yield curve had enabled the lender to drastically reduce its fixed rate products.
"Inverse yield curves, where the longer term rates are lower than the short term rates, are rare phenomena, but provide mortgage customers with the opportunity to lock in fixed rates lower than variable rates," Ms Coburn said.
According to Ms Coburn, the current situation with the yield curve has only ever happened three times, in the early 90s, during the GFC and now.
"Even if the RBA cuts rates next Tuesday and beyond, no-one is expecting a cut of the magnitude we've seen in fixed rates. If you are trying to budget and want more certainty in your finances, then it would make sense to consider fixing rates for 12, 24 or even 36 months," she said.
The lender's one and two year fixed rate home loans are now over 56 basis points lower than new to bank variable rates.