At Smartline Mortgage Brokers Rockingham, our mortgage brokers crunch a lot of numbers for all things concerning home loans. Not only do we keep a close eye on the Rockingham, Baldivis and Kwinana markets, we also keep an eye on interest rates, prices, WA and national trends. Basically, we look at a lot of tables and read a lot of statistics.
Recently, while looking at one of many interest charts, we noticed an interesting pattern that appears to apply since the beginning of 2009. While we are not allowed to guarantee the direction of rates and are not trying to predict them, the pattern appears to be valid for the period from 2009 to now.
The Pattern
The pattern is that the 3-year fixed rate seems to be between 3 and 6 months ahead of the variable rate. In other words, if you were to move the 3-year fixed line forward in a chart beside the line representing the variable interest rate, the lines would be very close to overlapping.
The pattern may be coming to an end soon because two of the second-tier lenders recently increased their fixed rates. We are hoping that this does not mean the start of an upward cycle for interest rates—but one never knows.
Currently, the average 3-year fixed rate for the 4 big banks is 4.97% p.a. One of our non-major lenders, however, is offering 4.79% p.a.
What It Means to You
While we aren’t allowed to guarantee predictions about the market, we are allowed to give our opinion on the general direction of rates and how they will affect the market.
We know that many economists think the RBA is going to cut their rate one more time but the action of the second-tier lenders is some cause for concern. We also don’t know whether housing prices will continue their slow rise or whether we will see a sharper rise that will wipe out any benefit gained by lower interest rates.
It is our opinion that now is a great time to buy. We just don’t believe that the risk of waiting justifies the reward if rates go down. You could “win” by waiting, but you could lose, too.
Call 0408 912 244 today for more information.
