ING slashes fixed-rate home loans ahead of RBA meeting
ING now offers the lowest 4- and 5-year fixed rates on the market.
ING has slashed its fixed-rate home loans as Aussies brace for another Reserve Bank (RBA) meeting on Tuesday.
The bank has lowered its 1- and 2-year fixed rates by 0.20 per cent, while its longer-term rates of three, four and five years have been cut by 0.25 per cent - equivalent to the typical cash rate hikes dealt by the RBA.
According to Canstar, ING now has the lowest 4- and 5-year fixed rates on the market at 5.34 per cent and 5.44 per cent, respectively.
Also read: RBA interest rate hikes could be over: Here’s why
Also read: $600,000: The latest RBA hike means your house cost has doubled
Also read: Interest rates: How to save $12k by refinancing your mortgage
ING joins 10 other lenders that have cut fixed rates in the past 10 days, including Macquarie Bank.
“Cutting fixed rates and making them more appealing is a way for lenders to lock in new customers and shore up their portfolio,” Canstar editor-at-large Effie Zahos said.
“These fixed-rate offerings are also timely for borrowers rolling off a fixed-rate period who may be seeking the security of locking in their rate again rather than worrying about how they will cope with potential rate increases.
“Locking in can give borrowers peace of mind as they have the certainty of knowing what their repayments will be each month for the fixed-rate term.”
This may be appealing, considering the average variable rate was now 6.14 per cent, Zahos said, but borrowers should be careful about jumping in.
“It could mean a quick saving windfall – but take care because what may look like a great rate now may not be as good in 12 months’ time, with some banks forecasting that the RBA may start to reduce the cash rate as soon as this year,” she said.
Mortgage cliff looms
The RBA expects 880,000 fixed-term mortgages will come to an end this year, after many borrowers locked in ultra-low interest rates during COVID.
Customers facing this ‘mortgage cliff’ will be facing the force of 10 consecutive rate hikes, with the RBA set to meet again on Tuesday.
If you're coming off a fixed-rate period, it’s worth shopping around and seeing if you can get a better deal than the ‘revert rate’ you will automatically go on to.
Don’t forget to factor in any fees and costs associated with refinancing, including any discharge, application, valuation, documentation, legal and settlement fees. Canstar previously found the refinancing costs were $807, on average.
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