Tuesday, 23 August 2011 Jessica Darnbrough
Further interest rate stability could increase the demand for fixed rate products, one industry stakeholder has claimed. Speaking to The Adviser, Citibank’s Matt Wood said right now borrowers are hesitant to lock themselves into a fixed rate product when there is a slight possibility that the Reserve Bank will cut rates. However, he said if the RBA holds again in September, momentum around fixed rate products will pick up pace. “Consumers are a little uncertain.
There has been a lot of media hype around the fact that the RBA could still make reductions to the cash rate,” he said. “I believe the RBA will keep rates on hold now for the foreseeable future, which will increase the popularity of fixed rate products. “I have no doubt that brokers are now talking about fixed rate products with their clients and we want to be part of those discussions, which is why we are always striving to provide both market leading service and a market leading rate.” Yesterday, Citibank slashed 34 basis points from its three year fixed rate, taking it to just 6.45 per cent. However, Citibank is not the only lender to trim its fixed rates.
Today, both Firstfolio and Australian First Mortgage cut their rates. Firstfolio trimmed its three year fixed rate by 30basis points, taking it to just 6.29 per cent. Similarly, AFM cut 30 basis points from its three year fixed rate Flexible Option product, taking it to 6.54 per cent. This is the second rate cut in as many weeks for the non-bank lender. AFM’s director Iain Forbes said, the new rate was not only comparable to the majors, but in many cases, beat what was currently on the market. “Our Flexible Option product offers a 100 per cent offset, as well as residential Construction loans, and an LVR to 95 per cent plus LMI, for owner occupied purchasers,” he said.