Home Loan rates have already fallen back from their high of 9.70% back in May. You can currently get a rate of between 9.20% and 9.40% depending on your bank and fixed term.
Home Loan rates are set to fall further. Wholesale rates (the rates at which banks fund at) have fallen a further 0.20% this week in anticipation of the Reserve Bank dropping interest rates on 25th July. Nothing is certain, but the weak state of our economy and homeowners re-fixing their mortgage at higher rates (effectively still reducing spending) will not be lost on the Reserve Bank.
We are expecting interest rates to fall 0.25% in July with a further 0.25% in September and a further 0.50% before March 2009. This is a view we have been expressing for a few months.
The major banks have talked about “higher credit costs” but these are already factored into current pricing and margins are their highest in some time. The slow down in housing volume is likely to see banks compete and therefore pass lower rates on to customers.
We are expecting to see the 1 Year Fixed Home Loan Rate to drop to around 9.20% later this month (and for the 2 year rate to drop to 8.95%.) By September the 1 year rates should be below 9% and by March 2009 rates will be around 8.50% possibly lower.
