February 1, 2024 UFinancial

Lenders cut fixed rates, say goodbye to incentives

Navigating rate changes and fixed vs. variable rates with UFinancial

In the ever-evolving landscape of the mortgage market, staying ahead of the curve is essential. Recent insights from interest rate experts indicate a notable shift away from the fierce competitiveness and attractive incentives that characterised the market in recent months.

UFinancial Mortgage Brokers highlight this transition, stating that the predicted surge in refinancing after the 2023 “mortgage cliff” didn’t come to fruition.

Banks are now scaling back cashback offers and fee waivers, redirecting efforts toward profit margins in anticipation of potential rate cuts in late 2024.

Amidst this recalibration, we’ve observed a silver lining for borrowers: a downward trajectory in fixed rates, particularly for longer terms.

In January alone, 13 lenders made cuts to fixed rates, with notable reductions from industry players like Macquarie. These lower fixed rates not only attract borrowers but also promise enhanced long-term profitability for banks, irrespective of future rate fluctuations.

Variable home loan rates have mostly gone up, making even small rate differences more important because rates are higher than they were five years ago.

At UFinancial, we stress how crucial it is to get loans with low rates and few fees, highlighting their benefits in the long run no matter what’s happening in the market.

Looking ahead

There’s talk about the RBA maybe cutting rates toward the end of 2024. Some might want to wait and see, but our team advises against it.

Variable rates under 6% are much lower than the average rate of 6.85%, so waiting too long is risky. Even though fixed rates seem good now, there’s a chance variable rates could beat them during the fixed term.

The timing around a rate drop is uncertain, but all eyes are on the quarterly Consumer Price Index. With inflation slowing down and monetary policy taking time to work, any rate changes are likely to happen later in the year.

It’s tricky to navigate all these changes, but at UFinancial, we’re committed to helping our clients make smart choices for their financial future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent. Content developed in partnership with IFPA.

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