(18 February 2010 – Australia) The Loan Market Group’s CEO, Dean Ruston, believes a new opportunity exists for smaller lenders to attract borrowers that desire more consistency in their home loan.Mr Ruston told The Adviser that there is currently a large discrepancy between standard variable and fixed rates.
The average fixed rate is now more than 2 percent higher than the average standard variable rate, Mr Ruston added.
While the group’s CEO believed the time to fix was early 2009, he added that there is an opportunity for smaller lenders to snare market share from the big four by lowering their fixed rates to compete with the majors variable rates.
Variable interest rates are climbing and more borrowers are wondering whether or not now is the time to fix their home loan, Mr Rushton told The Adviser.
Recent government initiatives have increased funds available to lenders contributing to the narrowing gap between fixed and variable rates, providing a better opportunity to fix, Mr Ruston said.
More competition between the banks along with greater confidence in the wholesale investor market may see some very attractive fixed rates coming through this year, Mr Ruston concluded.
The Advisor reported that last month ING DIRECT dropped the interest rate on its two, three, four and five year fixed rate residential mortgage products, to be 7.24 percent, 7.59 percent, 7.84 percent, and 7.94 percent respectively.