Banks forecasting lower cash rate
Fixed interest rates are sitting significantly below variable rates as lenders prepare for a cut in the official cash rate amid continuing global economic uncertainty.
Some lenders are offering fixed interest rates that are as much as 1.5 per cent below the bank's standard variable rate on the market, according to Loan Market chief operating officer Dean Rushton.
"We haven't seen a gap like this between fixed variable rates in some time," Rushton said.
He said the spread between fixed and variable rates had remained consistent since the Reserve Bank of Australia (RBA) last moved on interest rates by raising them from 4.5 per cent to 4.75 per cent in October 2010. However, he added that the spread had widened in the last 12 weeks with the three-year fixed rates falling significantly below variable rates.
"During the initial months of the global financial crisis, medium term (three to five year) fixed rates stood almost 2 per cent above variable rates, which highlights the extraordinary position the market is in right now."
Lenders have been forecasting the RBA will lower the official cash rate due to the volatile global economy and declining domestic consumer confidence, Rushton said.
He added that Loan Market had received a 15 per cent increase in enquiries from customers about fixed rate products in the last three months.
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