Strong Northcote results after interest rate cuts

This week’s sale of the single-fronted terrace was a really solid result, particularly given the degree of renovation required. However, results like these may become even more common considering that the Big 4 Banks have been quietly making substantial interest rate cuts on several of their loan products in recent weeks.

In case you haven’t heard, both the National Bank and the ANZ announced cuts to their fixed rate loans for both owner-occupiers and investors this week. The NAB cut 0.5% off the rate on their 5-year fixed loans for owner occupiers, whilst their two-year and three-year fixed rates on interest only investment loans have been cut by 0.3%. The ANZ has also taken the knife to their three-year and five-year interest only investment loans, cutting their rates by 0.4%.

These moves are being seen as a response to similar cuts by Westpac and the Commonwealth Bank during the previous week. The CBA cut its two-year fixed interest-only loan for investors from 4.84% to 4.34%, a reduction of 0.5%. Westpac also reduced their interest-only offers to investors, whilst we have heard that some of the smaller lenders, (including St George, Aussie and ING), have also been offering interest rate cuts.

These cuts are a sign that competition between lenders is having an impact on the rates we pay, which is always a good thing for anyone seeking a home loan. More importantly, these cuts could also provide an indication of a broader trend. After all, most financial commentators believe that lenders would not be reducing interest rates on their longer term fixed rate loans if they were expecting the Reserve Bank to move official rates upward within the near future.

So, whether you are planning on taking out a new loan to fund a purchase, or you’re thinking about refinancing an existing loan, be sure to talk to an independent mortgage broker before you commit to any deal offered by your bank.

Remember, if you need any advice or assistance on any property-related matter, don’t hesitate to give us a call.