July 19, 2016

Interest rates continue on downward slide

Home loan borrowers can expect more discounts to already record-low interest rate deals as fixed rate offers continue to tumble.

Since the Reserve Bank of Australia’s last meeting two weeks ago fixed loans have been slashed by at least more than one dozen lenders on about 200 loans and some up as much as 0.6 per cent.

AMP chief economist Shane Oliver said an August rate cut is almost certain but it will largely depend on the June quarter inflation figures due to next week.

AMP chief economist Shane Oliver is tipping another two rate cuts in 2016.

He’s also forecasting another cash rate cut in November which would take the cash rate to a historical low of 1.25 per cent.

Analysis by financial comparison website [www.ratecity.com.au] shows lenders including National Australia Bank, Bank of Queensland, Virgin Money, iMortgage, Australian Unity and AusWide are among those cutting fixed rates.

NAB announced it was cutting fixed rates below four per cent for various owner-occupied loans which is the lowest among the big four.

InfoChoice also showed variable rates are coming down — lender ING Direct this month reduced owner occupier loans with a 80 to 90 per cent loan-to-value ratio to 3.99 per cent — down from 4.09 per cent.

Dr Oliver said while consumer confidence has fallen post-federal election and Brexit, business conditions have held up well and the housing sector is reasonably solid in Sydney and Melbourne, but low inflation figures remained the big concern.

National Australia Bank announced it was cut owner-occupier fixed loans below four per cent.

“If the inflation comes in on the low side which we expect then that will clear the way for an RBA rate cut on the August 2,’’ he said.

“Our cash rate is at record lows but in a global context compared to Europe, Japan, UK and the US are rates are still quite high, some of the official rates are negative in some countries.”

The cash rate in Japan and Europe is zero, the US and the UK is 0.5 per cent.

RateCity spokesman Peter Arnold said for owner occupier borrowers who have 20 per cent or more equity then you should be hunting for a good deal.

Homeloanexperts managing director Otto Dargan said there’s many “under the table” fixed rate deals.

HomeLoanExperts managing director Otto Dargan said drops to fixed rate deals gave “a strong indication” more rate cuts were on the horizon.

“We’re seeing some lenders negotiate under the table discounts on fixed rates as well,’’ he said.

The inflation rate is at 1.3 per cent.

The Australian Securities Exchange’s RBA indicator which shows market expectations of a cash rate fall are at a 60 per cent chance.

This story first appeared on News Limited 7:33am July 19, 2016.