Interest Rates – Where We ‘Ve Been And Where We Might Be Heading

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Whilst many lenders have increased their investment loan interest rates in recent times, home loans are a different story.

As you can see from the chart below, the dark blue line (average basic variable) has been reducing throughout 2015.

Interestingly, the range between the most expensive and cheapest of the major banks is 0.51% p.a.. This is a huge gap given the major banks usually don’t vary too much. We pity the client that unknowingly walks into the most expensive bank and takes what they are given.

The 3 year fixed rate has also been tracking lower for the last 12 months and is in line with the basic variable rate. However, the 5 year rate has had a little bit of a lift in recent times.

 

Interest Rates - Where have we been1

 

(Related: One man’s meat is another man’s poison)

 

The next chart comes from the ASX futures market and gives us an insight into the potential future direction of the RBA cash rate. This chart is predicting a “hold” position from the RBA board until early next year where there might be another 0.25% rate cut.

The overall message we take from this chart is that low interest rates seem set to remain for quite some time.

Interest Rates - Where have we been2

 

If you would like me to have a look at the status of your current loan/s, I’d love to hear from you. There is no obligation, and my service will not cost you a cent.

 

Jason Thomson | Mortgage Adviser and Finance Broker | Smartline Cairns

 

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