Big lenders cut fixed rates despite Reserve Bank of Australia cash rate hikes

In the past week, eight lenders on the RateCity database have cut at least one fixed rate.

This includes Westpac, CBA, Firstmac, Loans.com.au, Macquarie Bank, Suncorp, Homestar Finance investment loans and Athena Home Loans.

Millions of borrowers have been tempted by ultra-low fixed rates, most locking in at or below two per cent, after the national interest rate rises.

For Shelley Fitzerald, insuring herself against rising interest rates by fixing her loan last year seemed like the best option.

“I think I’ll just look at that next year. At least this way I know exactly what I owe in terms of repayments until next year,” she said.

But the majority of these loans will expire mid to late next year which could expose borrowers to a new loan rate that could be double, even triple, what they’re paying now.

According to the online home loan marketplace Joust, variable loans are making a comeback due to fixed rates rising sharply.

“We’ve seen over the last 12 months, the number of customers specifically seeking a fixed rate mortgage has almost halved,” Joust chief executive Carl Hammerschmidt said.

“Because the cost of funding for fixed mortgages has declined,” AMP Capital chief economist Shane Oliver said.

Now borrowers are facing a big gamble – do they fix rates again or roll the dice on the variable rate?

“Whether you go fixed or whether you go variable is a difficult decision,” Sally Tindall of RateCity said.

“But the one thing people should do is look for a competitive deal.”

After four recent official rate rises, some economists are now predicting rate cuts next year.

Of the big banks, Commonwealth Bank has the most optimistic outlook, believing the rate will be 2.60 per cent by November before dropping to 2.10 per cent by the same month next year.

ANZ holds the most negative outlook, seeing rates rise to 3.35 per cent by November before dropping to 2.85 per cent by late 2024.