Fixed Rates Fall To Record Lows

FIXED home loans began falling further into record territory yesterday, after bond yields continued to plumb multi-decade lows.

Non-bank lender Wizard Home Loans has cut its two, three and five-year fixed rates as it predicted another interest rate cut from the Reserve Bank of Australia (RBA) within months.

Big banks kept fixed rates unchanged, but acknowledged the trend was definitely down.

``The emerging trend is downwards now, in fixed rates," an ANZ Banking Group Ltd spokesman said.

``We find the interest rate environment interesting at the moment, and are actively monitoring it," a National Australia Bank Ltd spokesman said.

Commonwealth Bank of Australia and Westpac Banking Corp both said home loan rates were constantly under review.

Wizard dropped its two-year fixed loan to 5.90 per cent, from 6.14, and its three-year rate to 5.85 per cent from 6.04 per cent. Its five-year fixed rate fell to 6.19 per cent, from 6.34 per cent.

Wizard executive chairman Mark Bouris said the Reserve Bank would probably hold rates steady until August or September but he predicted a 0.5 percentage point cut before Christmas.

``Once rates are cut later this year, I expect the Reserve to keep them steady for a sustained period."

AAP markets economist Garry Shilson-Josling said bond rates and fixed loan rates typically started moving in response to changed economic conditions, well before the RBA's overnight cash rate was changed. But that meant fixed rates were also likely to rise well before the RBA next lifted rates.

``Anyone who waits to switch into a fixed rate until the last minute before variable rates head higher will probably be doing it when fixed rates have already been rising for up to six months," he said.

Economists said fixed rate home loans were around their lowest levels ever.

But Mr Bouris said now might not be a good time to lock into fixed rates.