The era of ultra-low fixed rate loans could be over as interest rates on fixed rate loan products continue to increase.
Analysis from Rate City shows that the lowest fixed rate on offer is now 1.79 per cent after Greater Bank increased the interest rate on its fixed rate home loan from 1.59 per cent to 1.89 per cent for owner-occupiers.
There are now only 41 fixed rate loan products on the market under 2 per cent and Rate City predicts that number will fall to zero within six months.
According to Rate City, the new lowest fixed rate in the market is now 1.79 per cent available from UBank, Qudos Bank and RACQ for one year.
RateCity.com.au Research Director Sally Tindall said we might never see fixed rates this low again.
“Today’s hike from Greater Bank marks the end of an era for record-low fixed rates,” Ms Tindall said.
“We are unlikely to see another fixed rate of 1.59 per cent for years, if ever.
“At the beginning of 2021, there were 117 fixed rates under 2 per cent. This number peaked in April at around 180 but has plummeted in the last couple of months.
“While there are still 41 fixed rates under 2 per cent, the list is shrinking quickly. We expect the majority of these to be gone within the next six months.”
Ms Tindall notes that while interest rates on fixed rate loans are rising, variable loan rates are going in the opposite direction.
“Banks are still trimming variable rates, but the cuts have largely been to their basic loans and almost always reserved for new customers,” she said.
“While we expect more cuts to variable rates in the next few months, we could see some lenders hike later this year ahead of the RBA, if the cost of funding continues to escalate.”
