“While there are some great fixed rates at the moment… I do think it’s too early to fix,” Melissa Gielnik, mortgage broker and founder at Smart Lending, recently told MPA. “I think there are more rate cuts to come, so if people can pay a higher amount off their loan after the next one, that forced savings will help them reduce debt.”
Yet “reluctance for borrowers to fix their home loans has been easing recently”, Dan Nicotra (pictured), Suncorp Bank’s head of home lending product, told MPA on Tuesday.
Nicotra explained that sentiment for fixed-rate lending generally comes from two places:
- what borrowers anticipate will happen with the cash rate over the short to medium term
- how competitive fixed interest rates are (including the weighted average rate of a fixed/variable split solution)
“Recently we have seen stable conditions across inflation and the labour market, however, variable rates are largely in the mid 5%’s, so a competitive fixed rate can be around 75bps lower than the alternative variable rate, which will be central in cost to customer conversations between customers and their broker or lender,” said Nicotra.