Over the past couple of months you may have noticed that virtually all of the banks have been quietly raising their fixed rate loan price, initially over four years but lately over the two and three year terms as well.
This movement has occurred despite the Reserve Bank maintaining the official cash rate at 0.5% and continuing with its public position that it does not expect to have to increase the rate until 2024.
So what is going on?
The first thing to understand is that the fixed rate loan market is not directly linked to the cash rate. It is a market based on a variety of factors that go into helping the banks predict future trends. When fixed rates tend to move up, there’s more than a reasonable chance that banking analysts are predicting rate rises in the future.
Banks are publicly saying that they do indeed expect rates to rise and that they disagree with the Reserve Bank’s forecasts. ANZ economists have been particularly vocal,suggesting that they expect interest rates to begin rising in the second half of 2023.
What does all this mean?
Nothing is set in stone and everyone’s financial situation is unique. Many borrowers are now moving to lock in fixed rates for longer terms as they fear the interest rate market has bottomed out.
Whatever your current financing situation is, now may be a good time to review your current payments and investigate what loan terms are best for your personal circumstances. If you need assistance with this, please give the team at Australian Finance Hub a call and we will be happy to help assess your situation.