© James Eaves Mortgage Broker
Due to the worsening globaleconomic crisis, the Reserve Bank ofAustralia has decided to cut the standardcash rate further. This scenario leads to thedecreasing percentage of homelenders who avail of mortgage with fixedinterest rates.As the Europe debt situation continuallyaffects the world market, interest rates for a3-year mortgage deal has become lesserhaving an average rate of 0.6% comparedto the standard variable rate whichevidently is much cheaper.From the earlier months,fixed interest rates were prompted to be more expensive
compared to loans with variable rates. This has created a notion that the RBA willregularly cut rates to protect Australia against the threatening economic malaise thatcurrently takes place globally. The Reserve Bank of Australia has taken a cash rate of4.25% interest last November and December 2011.
The Central Bank’s minutes
during the monetary meeting held last December 20, 2011has decided to make a close call noting that the Reserve Bank of Australia noticed thatthe domestic economy has performed a bit stronger compared to the case over the lastsix months. The Central bank has also warned that Europe already has experiencedconsistent downside and has increased the risk of unstable economy affecting manynations worldwide, including Australia.Most home lenders would base the fixed loan pricing from the movement of money onthe market rather than the cash rate released by RBA. However, truth is the rates in themoney market are still influenced by the policy settings of the bank.As of December 20, Ratecity
a comparison group - found out that home loan clients
are paying an average rate of 6.29% to cover a 3-year fixed mortgage, rather than the6.89% standard variable rate. Last June, the standard variable rate was 7.30%, higherthan the 7.42% rates that fixed loans offer to clients.