The dream of a sub-5 per cent fixed home loan rate is coming to and end.
ME Bank withdrew its two-year fixed offer of 4.99 per cent on Monday afternoon, amid growing confidence about the direction of the cash rate, as the Reserve Bank nears its final decision for 2025.
Compare the Market Economic Director David Koch said the RBA was unlikely to budge on rates until well into next year – but even then, the conditions would need to be right.
“If Michelle Bullock is Goldilocks, the three bears are inflation, employment and economic growth,” he said.
“They all need to be ‘just right’ for the Reserve Bank to move on rates, because it’s such a fragile situation and one wrong step could scupper the progress we’ve made.
“(This week’s) move from ME Bank is another sign of growing consensus our next rate cut could be a while off, and there’s almost no chance of a cut in December.”
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But there’s a slim chance for the savvy. Koch suggests refinancing.
“If you’ve made some good progress paying down your loan, or your property value has gone up, there are still a few deals with a four in front available to borrowers with a loan-to-value ratio of 70 per cent or lower,” he said.
“When switching to a cheaper rate could help you free up hundreds, it’s really a no-brainer to check and assess your situation every few years. Be choosy like Goldilocks and find value that’s just right for you.”
The warning comes as new data shows Victoria is home to the nation’s home loan pain capital as one in 100 of the state’s mortgages are currently behind on repayments by at least 30 days.
S&P Global Ratings have calculated that 1 per cent of the state’s mortgages are in arrears, the highest level of any state – with only Canberra and the Northern Territory worse off.
Source: S&P Global Ratings
Melbourne dominated the nation’s worst-performing postcodes for staying on top of mortgage repayments, with six of the nation’s 10 poorest results recorded in the Victorian capital – including Craigieburn (3064), Pakenham (3810), Hoppers Crossing (3029), Werribee (3030), Frankston (3199), and Melton South (3338).
Around the rest of the country, the remaining postcodes in the top 10 for mortgage arrears were Baulkham Hills (2153), Casula (2170), Berkshire Park (2765), and Camden (2570).
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