Don’t wait for a rate rise to fix your home loan
- Leading economists in finder.com.au monthly RBA survey voted with Reserve for rate pause
- WA borrowers are least cautious about rising interest rates
- The average borrower can expect to pay extra $313 per month when rates hit “normal” levels
March 4, 2014, Sydney - Borrowers are being urged by one of Australia’s biggest comparison websites finder.com.au/homeloans to stop waiting for an interest rate rise before fixing their
home loan, following the Reserve Bank’s decision to leave the cash rate unchanged today.
All of the economists in the finder.com.au monthly Reserve Bank survey voted with the Reserve
Bank’s decision to leave the cash rate on hold at 2.50 percent. Read what Australia’s leading
economists had to say in the table below.
Michelle Hutchison, Money Expert at finder.com.au/homeloans said that while borrowers in
some states were fixing more than others, more borrowers should take advantage of the low
fixed home loan rates on offer before it’s too late.
“Borrowers have been shying away from fixed rate home loans for almost a year and shouldn’t
be waiting around for the Reserve Bank to raise the cash rate before they decide to fix their
“We’re seeing more borrowers looking for variable rate home loans through
finder.com.au/homeloans, with the proportion of variable home loan traffic up 15 percent since
mid last year.
“Nationally, the proportion of fixed home loans financed has been falling since April 2013
following a peak at over 20 percent of all loans financed, according to our research. In December
2013, the proportion of fixed loans was under 17 percent and we expect the same trend has
continued this year.
“Western Australian borrowers are the least concerned about rising interest rates, with the
lowest proportion of borrowers fixing their home loans (averaging 13.48 percent in 2013) than
any other state. On the other hand, we found Queensland borrowers were the most cautious,
with over one in five borrowers (21.09 percent) fixing their home loans on average last year (see
Average proportion of borrowers who fixed their home loan in 2013
|State||Proportion of fixed loans financed|
|New South Wales||18.56%|
|Australian Capital Territory||17.64%|
Source: finder.com.au/home-loans, Australian Bureau of Statistics, ranked by highest average proportion of fixed loans financed
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“Many borrowers, especially those who have a tight budget while interest rates are low, should
compare fixed home loans online. It’s likely that fixed home loans will start rising before the
official cash rate increases and this is when many borrowers miss out on the big savings on
offer,” said Mrs Hutchison.
“Our monthly Reserve Bank survey of leading economists expect interest rates to start rising
within the next year. If variable rates move back up to the historical normal level of 7 percent, that
will cost borrowers with the average $300,000 mortgage an extra $313 every month in
“If you can’t afford an extra $313 per month for a $300,000 home loan, you should look at your
options and compare fixed home loans.”
What the finder.com.au survey of leading banking economists has to say...
|Economist, financial institution||Comment about this month’s RBA decision|
|George Tharenou, ANZ ||"...I think that there's increasing signs of a broader|
recovery in the Australian economy across a range of
|Shane Oliver, AMP||"...Things certainly aren't strong enough to justify rate|
|Michael Blythe, Commonwealth Bank||"...The Reserve Bank has made it pretty clear that|
they're looking for a period of stability in interest rates..."
|Paul Bloxham, HSBC ||"...We think that the easing phase is done, that the RBA|
won't be delivering any further rate cuts..."
|Michael Witts, ING Direct||"...They have entered a period where they will be|
reviewing various data on the economy..."
|Alan Oster, NAB||"...We're basically on hold until November, and we've got|
one more rate cut in November..."
|Carla Baldock, RAMS ||"...It is likely the RBA may consider increasing rates|
later this year or early next year..."
|Janu Chan, St George Bank ||"...I think they've provided a pretty clear signal that rates aren't going to move in coming months..."|
Source: finder.com.au/home-loans, ranked alphabetically by financial institution
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For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
finder.com.au is Australia's most visited comparison website and has helped over 4.8 million Australians find better credit cards, home loans, life insurance, shopping deals and more since 2006. finder.com.au compares 250 credit and debit cards from 31 providers, over 300 home loan products, and information from 13 life insurance providers as well as online shopping promo codes, mobile phone plans, travel insurance and more. One Australian every five minutes is using finder.com.au to find better (Source: Google Analytics).