Australia’s leading mortgage broker and non-bank lender, Aussie Home Loans, today threw down the gauntlet to the major banks, dropping its three year fixed rate to below seven per cent – which is lower than the major banks’ average standard variable rates (SVR).
It is the first time since February 2009 that 3-year fixed rates have dropped lower than the standard variable rates across the industry. Aussie’s new 3-year fixed rate is lower than the Big Four banks’ average SVR, which is 7.38 per cent*, making it an ideal time to fix.
Aussie’s reduction in 3-year fixed rates by up to 0.35 per cent is a result of a lowering in the cost of funds in the money market, with the 6.99 per cent rate (comparison rate of ~7.18 per cent) the lowest in the market.
Aussie’s Chief Executive Officer, Mr Stephen Porges said now is a great time to fix, as the major banks have already foreshadowed rate rises independent of any moves by the Reserve Bank of Australia.
“The major banks have already indicated it will raise rates outside of any RBA meetings,” he said. “There is set to be a lot of turbulence in the mortgage market over the next few months. Also, the RBA has indicated that it will only leave rates on hold for the moment. That could change quickly.”
Mr Porges said one of the biggest concerns facing homeowners was what will happen to interest rates after the Federal election next Saturday.
“Regardless of who wins Government on the weekend, homeowners can lock in a market-leading rate, and in the process have peace of mind over the coming months and years,” he said.
Mr Porges said as a result of the uncertainty the Global Financial Crisis caused to the global and domestic economies, Australian homeowners had made a reluctant shift to the major banks.
“They felt like their home loan and financial services options were limited to the Big Four,” he said. “But they don’t have to take what the majors dish out. Our price cut will reinvigorate much-needed competition to our home loan market, and make it easier for ordinary Australians to manage their home loans.”
Mr Porges urged borrowers to consider switching their mortgages to fixed rates as these favourable money market conditions may not last a long time, especially in view of the volatility in Europe and North America.
“There is still a lot of uncertainty in the global market,” Mr Porges said. “Costs could blow out as we see a squeeze on the availability of credit in the money markets. This would force lenders to lift rates higher.”
The new fixed rates are effective for new and existing borrowers from tomorrow, Wednesday August 18 2010.
Aussie now has a loan book currently worth more than $37 billion, with more than 250,000 customers being serviced 24 hours a day, seven days a week by Aussie’s mobile lending force.
All of Aussie’s products and services are accessible via its national contact centre (on 13 13 33) or by visiting their local store or www.aussie.com.au.
* Figure of 7.38% based on average of CBA (7.36), Westpac (7.51), ANZ (7.41) and NAB (7.24) as of Monday August 16, 2010.
~The comparison rate is based on a loan of $150,000 over 25 years. Fees and charges may apply. WARNING: Each comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Applications for finance are subject to Aussie’s normal credit approval.