Several big lenders have cut fixed rates despite the Reserve Bank of Australia’s cash rate increases, which could be a good sign for real estate markets. 

According to financial services firm Our Broker Finance, a swag of lenders has already cut at least one fixed rate product, including CBA, Westpac, Macquarie Bank, Suncorp, Firstmac, Loans.com.au, Homestar Finance investment loans and Athena Home Loans.

Since May, the official cash rate has shifted from its historic low of 0.1%. After a succession of increases, official rates have landed at 1.85% in August, with many experts predicting further rises between 0.75% and 1% before Christmas.

Craig Betalli, Senior Broker, Our Broker Finance, said, “The rationale behind increasing interest rates is that it creates uncertainty for individuals and families, effectively trying to startle us into a more conservative approach to spending and even our real estate buying.

“As they say in financial parlance, what the RBA is doing is contractionary, and it is aimed at reining in inflation. But the central bank doesn’t want the economy to go into recession as this would add insult to injury and therefore the end is in sight for the current cycle of increases.”

Buyers will be back

As soon as the current interest rate cycle ends and consumers recognise most of the heavy lifting is over, Craig is confident buyers will be back in the market in more significant numbers. 

“This activity could start as soon as late October and November, just in time to buy before Christmas.”

Due to living through a significant event such as the pandemic, Craig believes consumers are far more resilient than even three years ago. 

“Once consumers recognise that they won’t keep getting smashed with more interest rate increases, they’ll get positive very quickly and return to the market in bigger numbers.”

Craig continues, “This upswing in consumer sentiment could happen as soon as two to three months and is great news for vendors considering a home sale before Christmas. 

“This means there is a short window for those buyers who have their finance approved to get in and negotiate with vendors.”

Don’t get caught out gambling on rates

Craig warns borrowers about gambling on fixed rates because the lenders are extending the carrot of reduced rates. “The alternative is rolling the dice and staying with a cheaper variable rate,” he said.

"Borrowers need to consider if grabbing a fixed rate is going to create a cheaper outcome given variable rates may stabilise or even go down in the new year.

“The chances are you are still better off with a variable rate.”

He concludes, "What you better off doing is working with a finance specialist such as Our Broker Finance to find a competitive rate that matches your needs.”

To find a suitable home loan contact Our Broker today on 1300 796 793.